SUN MICROSYSTEMS REPORTS SECOND QUARTER RESULTSSUN MICROSYSTEMS REPORTS SECOND QUARTER RESULTSRevenues and Earnings Improve Sequentially
SANTA CLARA, Calif. - January 18, 2002 - Sun Microsystems, Inc. (NASDAQ: SUNW) -- a leading provider of hardware, software and services that power enterprises and network computing, reported results today for the second quarter of fiscal year 2002 which ended December 30, 2001. Revenues for the second quarter were $3.108 billion, a sequential increase of 9% compared with revenues reported for the first quarter of fiscal year 2002, and a decrease of 39% compared with the same period a year ago. Net loss for the second quarter was $99 million and the net loss per share was $.03, a sequential improvement of 40% over the net loss per share reported for the first quarter of fiscal year 2002 and a decrease of 121% compared with net earnings per share for the same period a year ago (excluding losses on Sun's equity investment portfolio, restructuring charges, in-process research and development and related tax effects). During the second quarter of 2002, special items increased the net loss by $332 million. The special items comprised a $39 million loss on Sun's equity investment portfolio and restructuring charges of $511 million. A decrease of $218 million in taxes related to the above-mentioned special items partially offset these charges. Including these special items, the GAAP net loss for the second fiscal quarter was $431 million and the net loss per share was $.13. For the first six months of fiscal year 2002, Sun reported revenues of $5.969 billion, a decrease of 41% compared with the same period a year ago. Net loss for this period was $257 million and the net loss per share was $.08 (excluding losses on Sun's equity investment portfolio, restructuring charges, in-process research and development, and related tax effects). Including losses on Sun's equity investment portfolio, restructuring charges, in-process research and development, and related tax effects, the GAAP net loss for the first six months of fiscal year 2002 was $611 million and the net loss per share was $.19. Sun's Chairman and CEO, Scott McNealy stated, "Sun's vision, strategy, and execution continue to provide focus and strength in this difficult economic environment. We're innovators, pure and simple; always have been, always will be. Sun is a low cost provider by concentrating on one chip technology, the SPARCTM architecture, and one operating environment, the SolarisTM platform. This means we can efficiently leverage R&D investments across products ranging from multimillion dollar mainframe replacement servers right down to sub-$1,000 entry-level servers." McNealy continued, "In October, we rolled out the first phase of SunTM Open Net Environment (Sun ONE), which is the vision, architecture, platform and expertise for developing and deploying services on demand. We also began shipping, in volume, two new breakthrough products: the Sun FireTM 15K server, our new flagship high-end system, and the Sun FireTM V880 server, our new low-end system with better price-to-performance ratios than most comparable Wintel products. In addition, we expanded our relationships with partners to provide even better best-of-breed, lowest total cost of ownership solutions to our customers. As economic conditions improve throughout the industry, Sun has never been better positioned." "In the meantime," McNealy added, " we're mounting new offensives in industries such as health care, life sciences, education, government, and retail. Recent customer wins include American Hospital Association, De Novo Pharmaceuticals, The University of Southern California, The United States Department of Defense, The United States Bureau of Census, and Smart and Final, a warehouse grocery chain. Even the Salt Lake Organizing Committee uses Sun, as we are the Official Unix Server Supplier for the 2002 Olympic Winter Games. In addition, Sun just announced a joint agreement with the National Retail Federation (NRF), the world's largest retail trade association, to establish the only industry-wide retail university. This type of joint agreement is a first-of-its-kind. The NRF University will facilitate on-line learning, based on Sun e-learning software and hardware technologies, and is a prime example of how Sun's thought leadership is being applied in the retail industry." Michael E. Lehman, Sun's Executive Vice President of Corporate Resources and Chief Financial Officer said, "Compared with Sun's first fiscal quarter, bookings and revenue in the second fiscal quarter are up sequentially and inventory reductions are in excess of $200 million. We generated cash in the quarter on an operating basis, even with the payments we've made on our restructuring, and Sun's cash and liquid marketable investment position remains strong at approximately $6 billion." Lehman concluded, "We are showing signs of progress. Despite economic uncertainties, Sun still is investing in product development and core competencies to promote the long-term growth of the company." Effective July 1, 2001, Sun adopted Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 requires that goodwill no longer be amortized; however, goodwill must be reviewed at least annually for impairment. Sun had no goodwill impairment as a result of adopting SFAS No. 142. Sun has scheduled a conference call today to discuss its earnings for the second quarter of fiscal year 2002 at 6:00 a.m. (PST), which is being broadcast live at www.sun.com/investors. This news release contains projections and other forward-looking statements regarding future results and the future performance of Sun Microsystems, Inc., including Sun's belief that its vision, strategy and execution continue to provide focus and strength in this difficult economic environment, Sun's ability to continue to be an innovator, Sun's belief that as economic conditions improve, it has never been better positioned, Sun's belief that it is showing signs of progress and that investing in product development and core competencies will promote the long-term growth of the company. Such statements are just predictions and involve risks and uncertainties such that actual results and performance may differ materially. Factors that might cause such a difference include risks associated with increased competition, continued adverse changes in general economic conditions in the U.S. and internationally, including adverse changes in the specific markets for Sun's products, adverse business conditions, lack of success in the timely development, production and acceptance of new products and services, lack of success in technological advancements and the failure to reduce costs or improve operating efficiencies. These and other risks are detailed from time to time in Sun's periodic reports that are filed with the Securities and Exchange Commission, including Sun's annual report on Form 10-K for the fiscal year ended June 30, 2001 and its quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2001. About Sun Microsystems, Inc.Since its inception in 1982, a singular vision -- The Network Is The Computer -- has propelled Sun Microsystems, Inc. (Nasdaq: SUNW) to its position as a leading provider of industrial-strength hardware, software and services that power the Internet and allow companies worldwide to take their businesses to the nth. Sun can be found in more than 170 countries and on the World Wide Web at http://sun.com.
Sun, Sun Microsystems, the Sun logo, Solaris, Sun Fire, and The Network Is The Computer are trademarks or registered trademarks of Sun Microsystems, Inc. in the United States and in other countries. All SPARC trademarks are used under license and are trademarks or registered trademarks of SPARC International, Inc. in the United States and other countries. Products bearing SPARC trademarks are based upon an architecture developed by Sun Microsystems, Inc. UNIX is a registered trademark in the United States and other countries exclusively licensed through X/Open Company, Ltd.PR Contacts for Press and Analysts:
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