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To: van wang who wrote (764)	1/16/1998 9:57:00 AM
From: Paul Dieterich	Read Replies (2) \| Respond to of 1229

Here's the WSJ article on Sun. Europe very strong: Strong Server Sales Push Sun's 2Q Growth Dow Jones Newswires -- January 15, 1998 By Mark Boslet PALO ALTO, Calif. (Dow Jones)--Strength in Sun Microsystems Inc.'s (SUNW) high- and mid-range servers led the company to better-than-expected second-quarter results. A new family of low-end workstations released this week and high-end storage products expected later this month should provide a boost for the third quarter. Sun remains one of the most outspoken proponents of Unix-based computers and software for complex business applications. The Palo Alto, Calif., company's second-quarter showed that there is still plenty of room for growth in that market, despite the encroachment of lower end 'Wintel' systems using processors from Intel Corp. (INTC) and software from Microsoft Corp. (MSFT). Sales of Sun's high- and mid-range servers rose 50% year over year, the company said on a conference call with analysts and press. The top-of-the-line Starfire also did well, with more than 100 of the high-priced machines shipping and more than 100 orders for new ones received. Sun said it would soon need to add production capacity to its Starfire manufacturing. The strong quarterly performance came despite a delay in the company's new Darwin family of low-priced workstations, said Hambrecht & Quist analyst Doug Van Dorsten. The competitively priced workstations had been planned for December but were released earlier this week. It was a "bomber quarter," especially in light of the Darwin delay, Van Dorsten said. The quarterly results also were strong despite the financial crisis in Southeast Asia. "It was impossible not to be anxious" because of the company's exposure to Asia, said Goldman Sachs & Co. analyst Laura Conigliaro. But it turn out to be a "very good quarter," she said. "Virtually all the dynamics were working well, with the exception of Japan." Sun said Japanese revenue was down 4%. But U.S. sales were up a strong 19% year over year and European sales up an even stronger 22%. The company is seeing "accelerating growth in all major geographies, except Japan," said Michael E. Lehman, Sun's Chief Financial Officer. ""Our existing product line is clearly quite competitive in the marketplace." "We are winning against International Business Machines Corp. (IBM) and Hewlett-Packard Co. (HWP)," added Ed Zander, president. Sun declined to detail the computer storage products it plans to release in advance of its analysts meeting on Jan 29 and 30. The products are to incorporate technology from Sun's acquisition of Encore Computer Corp. Analysts said the greatest hurdle to the third quarter will be Japan, which has traditionally been a strong contributor. Sun will benefit, though, from year-ago Japanese sales comparisons that are not too difficult. For the second quarter, Sun had net earnings of $149.4 million, compared with $178.3 million a year ago. Revenue was $2.45 billion, up 18% from $2.08 billion last year and ahead of analysts' expectations. The strong dollar knocked 4 percentage points of growth from the revenue line. Without charges of $110.1 million, earnings were 57 cents a share, compared with Wall Street's expectations of 54 cents a share. Orders were up 19.6% to $2.57 billion. The quarter also saw gross margins tick up to 52% from 51% in the prior quarter, and the company took advantage of its greater profitability to increase research and development spending. Sun also added 1,700 new employees in the quarter, 325 of which came from its acquisitions of Encore and Chorus Systems S.A. Clearly the quarter helps "allay fears that Sun will be trampled by Intel and Microsoft" selling Windows NT servers, said Daniel R. Kunstler, an analyst at J.P. Morgan Securities. "It just isn't going to happen."