Sun Microsystems Inc’s wasn’t best pleased with first quarter revenue up 15% at $2.09bn over $1.85bn last time, blaming currency and weakness in Europe for taking a few points off its top line. Profit was down 12% at $108.4m from $123.3m including $52.2m for the acquisitions of Diba Inc and Integrity Arts plus a $19.9m income tax charge associated with the transactions. Earnings per share were three cents off the consensus at $0.27. Gross margins were up slightly at 51%. Sun said Latin America and South East Asia markets were down along with Europe, and it didn’t manage to close as many technology licensing and OEM deals at the end of the quarter as it had hoped to. US is 52.8% of revenue, Europe 23.5%, Japan 12.1% and rest of the world 11.6%. 10.6% of revenue went on R&D, headcount was up 1,300, including 200 at JavaSoft. Cash stands at $987m. It’s consolidating its greater London UK operations at a single site and is building a new campus in Santa Clara plus plant in Colorado. Order backlog was down to $350m. CEO Scott McNealy said Sun is now on every customer’s short list of potential system suppliers – where even only a year ago it wasn’t – and says the only way the competition can touch it is by claiming to customers that Sun has no service and support. The UltraSparc i RISC will still be announced this year, Sun assures us. The low-cost UltraSparc variant with an integrated PCI bus is seen as the engine which will drive the PCI makeover of Sun’s workstations line. On its earning call yesterday, Sun said it would be addressing its lackluster low-end workstation line shortly. Second-generation Photon Fiber Channel storage is due imminently. High-end workstations, the new workgroup servers and storage were the hottest products in its first quarter. Although competition from Windows NT is coming, the average number of processors in NT systems is only 1.2, Sun observes.
