Sun Microsystems Exceeds Profit Target; Reports Results for Fourth Quarter and Full Fiscal Year 2007
SANTA CLARA, Calif., July 30 -- Sun Microsystems, Inc. reported results today for its fourth quarter and full fiscal year, which ended June 30, 2007, exceeding its operating margin target, improving gross margin and delivering another sequential quarter of profit.
Revenues for the fourth quarter of fiscal 2007 were $3.835 billion. For the full fiscal year, the Company reported revenues of $13.873 billion, an increase of 6.2 percent over fiscal year 2006. Total gross margin as a percent of revenues for the fourth quarter was 47.2 percent, and gross margin for the full fiscal year was 45.2 percent, an increase of 2.1 percentage points over fiscal year 2006. Operating margin for the fourth quarter was 8.5 percent.
Net income for the fourth quarter of fiscal 2007 on a GAAP basis was $329 million, or $0.09 per share on a diluted basis. For the full fiscal year, net income was $473 million, or $0.13 per share, on a diluted basis, as compared with a net loss of $864 million, or ($0.25) per share, for fiscal 2006.
Cash generated from operations for the fourth quarter of fiscal 2007 was $564 million, and cash and marketable debt securities balance at the end of the quarter was approximately $5.9 billion.
"With a solid strategy and consistent execution, we delivered on our commitment to achieve at least 4 percent operating margin in the fourth quarter. This milestone marks significant progress toward our longer-term growth plan of at least 10 percent operating margin for the full fiscal year 2009," said Jonathan Schwartz, president and CEO of Sun Microsystems. "The Solaris 10 Operating System continues to fuel opportunity for us and our partners, allowing customers to leverage built-in virtualization to harvest more value from their datacenters, without the unnecessary expense of separate software licenses."
Sun has scheduled a conference call today to discuss its financial results for the fourth quarter fiscal year 2007 at 1:30 p.m. (PT), which is being broadcast live at www.sun.com/investors.
About Sun Microsystems, Inc.
A singular vision -- "The Network Is The Computer" -- guides Sun in the development of technologies that power the world's most important markets. Sun's philosophy of sharing innovation and building communities is at the forefront of the next wave of computing: the Participation Age. Sun can be found in more than 100 countries and on the Web at http://sun.com.
GAAP Net Income: GAAP net income for the fourth quarter of fiscal 2007 included: $48 million of stock-based compensation charges, $15 million of restructuring and related impairment of assets charges, $70 million of purchase price accounting adjustments and intangible asset amortization charges related to acquisitions in fiscal 2006, $1 million of gain on equity investments and a $5 million benefit of related tax effects. The net impact of these five items reduced earnings per share on a diluted basis by approximately $0.04.
This press release contains forward-looking statements regarding the future results and performance of Sun Microsystems, Inc., including statements regarding Sun's longer-term growth plan of at least a 10% operating margin for the full fiscal year 2009. These forward-looking statements involve risks and uncertainties and actual results could differ materially from those predicted in any such forward-looking statements. Factors that could cause Sun's actual results to differ materially from those contained in such forward-looking statements include: risks associated with developing, designing, manufacturing and distributing new products; lack of success in technological advancements; pricing pressures; lack of customer acceptance and implementation of new products and technologies; the possibility of errors or defects in new products; a material acquisition, restructuring or other event that results in significant charges; competition; adverse business conditions; failure to retain key employees; the cancellation or delay of projects; Sun's reliance on single-source suppliers; risks associated with Sun's ability to purchase a sufficient amount of components to meet demand; inventory risks; risks associated with Sun's international customers and operations; delays in product development; Sun's dependence on significant customers and specific industries; and Sun's dependence on channel partners. Please also refer to Sun's periodic reports that are filed from time to time with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2006 and its Quarterly Reports on Form 10-Q for the fiscal quarters ended October 1, 2006, December 31, 2006 and April 1, 2007. Sun assumes no obligation to, and does not currently intend to, update these forward-looking statements except as required by law.
To supplement Sun's consolidated financial statements presented in accordance with GAAP, Sun provides non-GAAP net income (loss) and non-GAAP net income (loss) per share data. The presentation of these non-GAAP financial measures should be considered in addition to Sun's GAAP results and is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Sun's management believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding certain charges, gains and tax effects that may not be indicative of Sun's core business operating results. Sun believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Sun's performance. These non-GAAP financial measures also facilitate comparisons to Sun's historical performance and its competitors' operating results. Sun includes these non-GAAP financial measures because management believes they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. Non-GAAP measures are reconciled to comparable GAAP measures in the table entitled "Non-GAAP Calculation of Net Income (Loss) Excluding Special Items" following the text of this press release.
Sun, Sun Microsystems, the Sun logo, Solaris and The Network Is The Computer are trademarks or registered trademarks of Sun Microsystems, Inc. in the United States and other countries.