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Sun Micro beats Street
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April 13, 2000: 6:05 p.m. ET
Computer maker's third-quarter revenue, earnings, and bookings hit highs
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NEW YORK (CNNfn) - Networking computer products maker Sun Microsystems Thursday reported fiscal third-quarter earnings that exceeded analyst expectations, as its revenue, earnings, and bookings growth hit record levels.
Sun reported a third-quarter profit of $436.2 million, excluding one-time items, up 49 percent from last year's $291.9 million. Third-quarter earnings per share rose 44 percent to 26 cents from 18 cents in the same period last year. The mean analyst expectation for Sun's earnings per share was 23 cents, according to earnings tracker First Call.
Including gains from the sale of equity investments and other one-time items, net income for the latest quarter totaled $508.1 million, or 30 cents a share. Sun's revenue rose to $4.005 billion, a 35 percent increase from the third quarter of 1999. Order bookings rose by a record 41 percent over last year's third quarter.
Sun released its results after the closing bell Thursday. Prior to the news, Sun (SUNW: Research, Estimates) shares closed down 2-1/4 at 77-3/4.
"This quarter we kicked some major bottom out there," said Sun Chairman and CEO Scott McNealy.
McNealy said that Sun's business is "just getting rolling." Rather than having a goal of connecting every person to the Internet, Sun wants to connect every thing - meaning every electronic device - to the Internet. The average home has more than 48 microprocessors, and automobiles can have 50 to 100 microprocessors each, none of which are connected to the Net, McNealy said.
"There is low-hanging watermelon everywhere to get more market share," the Sun chairman said.
Palo Alto, Calif.-based Sun is best known for its enterprise servers that use the Solaris operating environment, workstations, storage products, UltraSparc microprocessors, and the Java and Jini platforms. Java is a programming language often used to provide animation, calculators, and other functions on Web pages. Jini technology is designed to connect a variety of devices to a network and enable them to work together.
Sun has benefited strongly from the growth of the Internet, since its servers, microprocessors, and programming languages are commonly used by companies to build and run their Web sites. Sun's stock soared from around 30 in May 1999 to just over 100 late last month. It now trades at a lofty 104 times earnings, and the company has a market capitalization of about $141 billion.
 "This was, without a doubt, a blowout quarter," said Michael Lehman, Sun's chief financial officer. "The demand picture was better than we had been expecting. Order rates remained strong in the last month of the quarter, and we generated nearly a billion dollars of cash."
Lehman said on a conference call that for the next fiscal year Sun expects a long-term revenue growth rate "just north of 25 percent," and earnings per share growth at or slightly less than that level.
"We will face some pretty tough comparisons on the revenue line in the next fiscal year," Lehman said. 
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Sun Microsystems
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