I'm starting to feel significanly better, re Sun. The .60 rise today in a late tumbling market didn't hurt.
Best, Mark
Tuesday Jan 29, 2008
Free Virtualization, and Sun's Q2 Results
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We released our official earnings on Thursday last week, after pre-announcing the news one week prior alongside the announcement of our intent to acquire MySQL.
Our second quarter financial announcement came down to this: we doubled our profitability compared to a year ago, with $260 million in net income on revenues of $3.6 billion, while generating $336 million in cash from operations. We also repurchased $750 million of our own shares within the quarter, and reaffirmed our guidance for the full year of low to mid single digit revenue growth, and at least 8% operating profit for Q4 (excluding any acquisition charges).
From a financial perspective, with the glass half empty, total revenues were up only slightly (just over 1% vs. a year ago). This was partly due to changes in how we do business with our resellers and channel partners – we'll be reporting revenue when there's a sale to an end user customer, not when we've fulfilled an order from a business partner that sells to end users. (This makes us more transparent, too.)
Those changes took a few percentage points of revenue growth off the top line, and were one reason for the disparity between our bookings growth of 7%+ (bookings are orders for delivery within the next six months) and our revenue (orders fulfilled/installed within the quarter). With the glass half full, this generated a very healthy “book to bill” ratio, which investors look to for insight into future performance. Our total deferred revenues (products and services) also ballooned considerably, growing 24% year over year, to almost $2.7 billion. A very healthy increase.
What were some of the strategic highlights within the quarter?
Topping the list was the interest in Sun xVM. xVM is our free, open source virtualization platform, which we unveiled at Oracle Open World, alongside our management platform, xVM Ops Center. xVM will virtualize Windows, Linux or Solaris, on either Dell, HP, IBM or Sun hardware. We've seen broad interest from across the world, especially from customers that want to avoid putting a proprietary virtualization technology at the base of large scale open source datacenters (“why go back?” one said to me). Interest in our virtualization story (from xVM to Solaris containers) expands to every industry, and nearly every customer – it's just about the number one item on the agenda.
Next on the list was signing a Solaris OEM deal with Dell, through which they've endorsed and will support Solaris across their server and blade platforms. This was a very big deal for us – an endorsement from the volume leader in PC's and commodity infrastructure matters to our customers. Michael joined me on stage, and politely invited me to join Dell's “Regeneration” (an offer I gladly accepted in exchange for a t-shirt). Dell joins IBM and Intel as Solaris OEM partners. Personally, I'd love to add Hewlett Packard to the list of partners our customers can rely upon for Solaris support.
We saw double digit growth in emerging economies, from India, China, Latin America, to portions of Eastern Europe and the Middle East. We saw booming growth in our UltraSPARC T2 Niagara platform, generating approximately $285 million in billings, 100% higher than a year ago. 100% growth! Why's it growing so fast? A focus on eco-efficiency, on outright raw performance, integrated (ie., free) virtualization and crypto support - we see opportunity emerging every day. With the acceptance of SPARC and Solaris 10 as open platforms driving new conversations and opportunity (with our existing, and new customers - if you'd like to try a Niagara 2 (officially, a T5120 or T5220) system for free, click here).
Our x64 business was relatively flat within the quarter – which was a low point, certainly. But we're just now introducing our new Intel offerings, and starting to build out our blade offerings. So I've got more confidence heading into the back half of the year, and with a bulked up product line that continues to expand and evolve.
blogs.sun.com |
