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Friday July 23 2:11 AM ET,,,Sun Micro Reports Stronger-Than-Expected Earnings
PALO ALTO, Calif. (Reuters) - Sun Microsystems Inc. (Nasdaq:SUNW - news), a maker of network servers, workstations and software, reported stronger-than-expected fourth quarter earnings, with revenues fueled by strong sales in all areas and record orders in the quarter.
Sun reported net income for the fourth quarter of $395 million, or 48 cents a share, vs. $273 million, or 35 cents a share a year ago, including an acquisition-related charge, or 35 cents a share. Excluding the charge, year-ago per share earnings were 37 cents.
The earnings beat the Wall Street consensus of 46 cents, as compiled by research firm First Call Corp. Revenues rose to a record $3.52 billion, up 22 percent from $2.88 billion.
''There was nothing that was weak, it was a really strong quarter across the board,'' said Michael Lehman, Sun's chief financial officer, in an interview.
The Palo Alto, Calif.-based company also saw growth across geographies. In the U.S., revenues were up 23 percent, in Europe, revenues were up 13 percent, Japan, up 33 percent and the rest of the world, including Latin America and other parts of Asia, was up 36 percent
Sun said it continued to gain market share in the quarter against its competitors, due to its relentless focus on networked computing, where it offers corporate customers products ranging from reliable network servers to software like its Java programming language to Solaris, its version of the UNIX operating system.
The company has recently been more aggressive about its ability to help ''dot com'' corporations, and has been touting its growing customer list, which includes E+Trade Group Inc.,, Lucent Technologies Inc. (NYSE:LU - news), Cathay Pacific and Dr.Koop.com and many other companies which are developing fast-growing electronic commerce businesses.
On a compounded annual growth rate, Sun's revenues have been growing at a rate of 20 percent over five years, which is faster than its competitors, especially International Business Machines Corp. (NYSE:IBM - news) and Hewlett-Packard, Sun executives said.
''We have now grown the company at a compounded annual growth rate of 20 pct in the last five years,'' Sun President Ed Zander said on a conference call with analysts. ''We continue to gain share against competitors, most notably IBM and HP.''
Sun said its business was strong across all product lines, ranging from servers to low-end workstations to software. Orders were up 20 percent, which was better than expected, they said.
Product revenues were up 17 percent, while services were up a whopping 38 percent.
''It's very hard to knit-pick this quarter,'' said Jay Stevens, a Buckingham Research analyst. ''What do you say about a company where all of their forecasting and all of what they said in the past is coming true...You've got to own the stock.''
Sun executives tried to rein in analysts' expectations on the company's conference call, as some analysts asked if it was possible to hit revenue growth of up to 25 percent in the next fiscal year.
''What we are trying to say is that we are happy with the plans we put in place for this fiscal year,'' Lehman said. ''People were trying to talk up the revenue number...But (SUN CEO) Scott (McNealy) was saying 20 percent plus is a good number. That is what we have been talking about before.''
For the full 1999 fiscal year, Sun said its net income rose to $1.03 billion from $763 million, including acquisition-related charges in both years, and earnings per share rose to $1.27 from 97 cents. Excluding acquisition-related charges net income for the latest year was $1.157 billion, or $1.42 a share.
Revenues for the year rose to $11.73 billion from $9.79 billion.
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Friday July 23 2:12 AM ET
Moving 'Outside The Box,' Gateway Profits Rise
By Scott Hillis
SAN DIEGO (Reuters) - Direct computer seller Gateway Inc. (NYSE:GTW - news) Thursday posted sharply higher profits for the second quarter, saying its strategy of diversifying ''outside the box'' was starting to pay off.
Gateway, the country's fifth-largest computer maker, said net profits for its second quarter ended June 30 rose to $89.2 million, or 56 cents per diluted share, up 47 percent from the $60.7 million, or 38 cents a share, a year earlier.
That edged out Wall Street consensus forecasts of 55 cents a share, as compiled by First Call Corp.
Worried that intense competition in the personal computer business could start eroding its bottom line, Gateway has moved in recent months to offer other products and services, including financing, software and Internet access.
The San Diego, Calif.-based company said revenues rose to $1.9 billion in the quarter from $1.6 billion a year ago as PC shipments climbed 36 percent to 1 million units.
Gateway stock fell $2.94 to $63 on the Nasdaq trading system Thursday. The company announced earnings after the close of the market.
Although average unit prices fell 13 percent from the year-ago period to $1,905, operating margins for the quarter rose to 22 percent from 20.6 percent, Gateway said.
Growth was boosted by rises in non-PC operations, which accounted for more than 10 percent of Gateway's total income, ahead of the company's target, it said.
Gateway said results were particularly strong its Internet service provider, Gateway.net, which doubled its membership to 400,000, making it one of the fastest-growing Internet service providers in the country.
''We continue to focus like a laser on executing our strategy of moving beyond the box, and it paid off with a record quarter in what's typically the industry's slowest period,'' Gateway Chief Executive Ted Waitt said in a statement.
''Clearly we're well ahead of our plan to generate a richer, more diverse revenue stream, while our core systems business has never been healthier,'' Waitt said.
Citing the robust Internet performance, Gateway Chief Financial Officer John Todd said the company was not now in talks to acquire a major Internet service provider.
Wall Street has speculated for weeks that Gateway was shopping for an Internet service provider like EarthLink Networks Inc. or MindSpring Enterprises Inc. (Nasdaq:MSPG - news) .
''We are currently not in discussion with any major ISP,'' Todd told Reuters in an interview. ''We are not in discussions for an acquisition of an ISP.''
''We are demonstrating that we are a significant Internet player,'' Todd said.
In a conference call later, Todd was bullish on Gateway's prospects for the rest of 1999, voicing confidence that consumers would be drawn in by a growing range of services.
''The combination of strong first-half momentum and a good start in July gives us comfort for the back half of the year,'' Todd said. |
