Palo Alto, California, Oct. 14 (Bloomberg) -- Sun
Microsystems Inc. said fiscal first-quarter earnings more than
doubled, lifted by sales of its powerful server computers that
run many of the world's busiest Internet sites.
Net income in the period ended Sept. 26 rose to $271.1
million, or 33 cents a share, from $113.9 million, or 14 cents, a
year ago. Excluding expenses for acquisitions in both quarters,
profit was $274.8 million, or 33 cents a share, up from $197.9
million, or 25 cents.
Sun kept sales and earnings on track by selling more high-
powered computers used by Internet companies including America
Online Inc. and auction company eBay Inc. Other computer makers,
such as Hewlett-Packard Co. and Unisys Corp., have said that
sales growth will fall short of some expectations.
``Other companies are having a rough time competing with
Sun,' said Art Russell, an analyst at Edward D. Jones & Co. in
St. Louis, who rates Sun shares ``buy.'
Sales rose 25 percent to $3.12 billion from $2.49 billion.
Orders, an indicator of future sales, rose 19 percent.
Analysts expected Sun to earn 31 cents a share in the
quarter, the average of estimates gathered by First Call Corp.
Shares of Palo Alto, California-based Sun rose as high as
92 1/16 on electronic networks and regional exchanges after the
close of regular U.S. trading. They rose 1/32 to 89 13/32 today
before the report, and have more than doubled so far this year.
Grabbing Market Share
``Our success in the first quarter came at the expense of
our traditional competitors,' Chief Executive Scott McNealy said
in a statement. ``We gained share in many of our key markets,
especially in servers for the Internet.'
Rival Hewlett-Packard said earlier this month that sales in
the fourth quarter ending Oct. 31 will increase about 10 percent,
below forecasts that were as high as 13 percent. Chief Executive
Carly Fiorina is trying to compete better with Sun by weeding out
salespeople in North America who aren't moving enough servers.
``It was Sun's sales force they should blame for their
problems,' said Sun President Ed Zander. ``We made huge market
share gains against H-P this quarter.'
Unisys today forecast slower sales growth for the next two
quarters, blaming price cuts by rivals. Shares of the company
fell 15 11/16, or 37 percent, to 26 9/16, a record drop.
Y2K Concerns Subside
In Sun's last earnings conference call before 2000, McNealy
and other Sun executives said it appeared that the Y2K computer
bug wouldn't disrupt their business.
Chief Financial Officer Mike Lehman said though there was
``still some level of uncertainty' about the issue, sales aren't
expected to slump in coming months.
Some analysts are concerned that corporations may stop
buying new computers soon in order to get ``locked down' before
the start of the year. Problems are expected because older
computers use just two digits for the year in date functions,
meaning they can't differentiate 1900 from 2000.
Lehman, known among analysts and investors for being
conservative, said that ``this was a terrific quarter by every
measure I can think of.'
Last October, Sun's shares started a rally that has seen
them almost quadruple since.
The stock took off after last year's first-quarter earnings
report, which showed that Sun was selling more of its Starfire
computers and Solaris software, bucking forecasts that companies
would dump Sun machines in favor of computers running on
Microsoft Corp.'s Windows NT operating system and Intel Corp.
chips.
Unlike other large computer makers, Sun never adopted the
Microsoft operating system, which has proved less reliable than
Sun's Solaris for computers running online businesses.
``Instead of being NT roadkill, Solaris has widened the
gap' in performance, McNealy said on today's call.
¸1999 Bloomberg L.P.
very impressive report.
regards |
