updated 7/26/2005 6:55:50 PM ET 2005-07-26T22:55:50

Sun Microsystems Inc. posted a fourth-quarter profit on Tuesday, beating Wall Street expectations as the server and software maker said demand has stabilized after a long decline that started with the dot-com bust of 2000.

For the period ended June 30, Sun earned $121 million, or 4 cents per share, compared with a profit of $783 million, or 23 cents per share, in the second quarter of fiscal 2004. The year-ago profit included $1.6 billion in other income from a settlement with Microsoft Corp.

Sales slipped 4.2 percent, to $2.98 billion from $3.11 billion in the same period last year.

Excluding special items, the Santa Clara-based company earned $200 million, or 6 cents per share, compared with a loss of $173 million, or 5 cents per share, last year.

On that basis, Sun’s earnings beat Wall Street expectations. Analysts were expecting a profit of 1 cent per share on sales of $2.98 billion, according to Thomson Financial.

“It sure feels nice to make money — that always feels good,” said Scott McNealy, Sun’s chief executive. “We spent the last year getting in shape and succeeding on a lot of fronts, and setting the company up for a really successful ’06.”

For the full fiscal year, Sun lost $11 million, or break-even on a per-share basis, compared with a loss of $388 million, or 12 cents per share, in fiscal 2005. Sales declined 1.1 percent to $11.07 billion in fiscal 2005 from $11.19 billion in fiscal 2004.

“FY05 was a year of stabilized revenue and earnings,” McNealy said. “Our opportunity for Y06 is sustained growth and profitability.”

Following its usual practice, Sun did not release an earnings or sales forecast for the fiscal first quarter.

But Sun’s president, Jonathan Schwartz, said the company would announce a major win with General Motors Corp. on Wednesday. The automaker will be deploying Sun’s Java Enterprise System and Sun’s Solaris 10 operating system. Terms of the deal and other details were not disclosed.

Sun thrived in the late 1990s as dot-coms and other companies raced to purchase Sun’s proprietary servers and software. But a large chunk of that business disappeared after the tech crash of 2000 and never returned.

Sun’s competitors, however, have largely recovered by offering systems that are based on inexpensive hardware and software such as Intel processors and the Linux operating system.

Recently, Sun appears to have stabilized though profitability hasn’t been consistent. It has revamped its hardware and software, including selling servers based on Advanced Micro Devices Inc.’s Opteron chip. It’s also signed a truce with archrival Microsoft.

And Sun has managed to maintain a sizable stockpile of cash and marketable securities — now more than $7.5 billion.

Last month, it announced it would spend a large portion of that cash on two acquisitions it hopes will re-ignite growth.

On June 2, Sun said it was buying Storage Technology Corp. — a maker of tape drives, network management programs and backup software — for about $4.1 billion. Less than a month later, Sun said it was buying SeeBeyond Technology Corp., a maker of business-integration software, for $387 million in cash.

The deals are not expected to close until this fall.

The fourth-quarter results were not announced until after the stock markets ended regular trading.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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