Sun Micro 4Q profits increase as costs drop

Sun Microsystems’s fourth quarter result surprised everyone as it earned $329 million, or 9 cents per share, after reducing workforce and slashing component prices. The company reported a net loss of $301 million a year earlier. In the quarter, Sun’s revenue increased 18 percent to $3.84 billion from $3.83 billion, as services revenue raised slightly, whereas hardware revenue declined. Operating expenses fell 25 percent to $1.49 billion. Quarterly profit topped Wall Street targets as Sun’s operating profit margin reached 8.5 percent, topping its earlier goal of at least 4 percent. The company returns to profit after facing five consecutive loss-making quarters, which apparently forced it to slash a huge workforce of 5000 people, reduce device’s prices and implemented longer-term growth plan of at least 10 percent operating margin for the 2009 fiscal year. Buoyant with the quarterly result, the stocks rose 10% to $5.38; however, later fell 3 cents at $4.89. Shares of Sun, which also sells workstations, software, storage and services, have fallen 9.2 percent this year. Image Via: Bloomberg