Sun Microsystems: Fiscal 3Q09 Financial Results

Sun Microsystems, Inc. reported results today for its third quarter of fiscal 2009, which ended March 29, 2009.

Revenues for the third quarter of fiscal 2009 were $2.614 billion, as compared with $3.266 billion for the third quarter of fiscal 2008, and compared with $3.220 billion for the second quarter of fiscal 2009. Total gross margin as a percent of revenues was 42.7, a decrease of 2.2 percentage points as compared with the third quarter of fiscal 2008 and an increase of 0.8 percentage points as compared with the second quarter of fiscal 2009.

Net loss for the third quarter of fiscal 2009 on a GAAP basis was $201 million, or $(0.27) per share on a diluted basis, as compared with a net loss of $34 million, or $(0.04) per share, for the third quarter of fiscal 2008, and compared with a net loss of $209 million, or $(0.28) per share, for the second quarter of fiscal 2009. GAAP net loss per share includes a restructuring charge of $46 million primarily related to the restructuring announcement of November 2008.

On a non-GAAP basis, net loss for the third quarter of fiscal 2009 was $52 million, or $(0.07) per share on a diluted basis, as compared with a non-GAAP net income of $132 million, or $0.17 per share, for the third quarter of fiscal 2008, and compared with a non-GAAP net income of $114 million, or $0.15 per share, for the second quarter of fiscal 2009. Non-GAAP net income per share excludes purchased in-process research and development, amortization of acquisition-related intangibles, stock-based compensation, restructuring and related impairment of long-lived assets, net gain or loss on equity investments and the tax effect of these non-GAAP adjustments.

Sun ended the quarter with a cash and marketable debt securities balance of $2.990 billion and generated cash flow from operations for the third quarter of fiscal 2009 of $178 million – the third consecutive quarter of positive cash flow from operations in fiscal 2009, and following upon 19 consecutive years of positive cash flow from operations.

Third Quarter Highlights

• Grew billings nearly 4 percent year-over-year in combined key growth categories of Total Software, Open Storage, Solaris-based SPARC CMT Servers, and X64 Servers.
• Combined key growth categories accounted for 40 percent of total billings in the third quarter of fiscal 2009 versus 30 percent in the third quarter of fiscal 2008.
• Total Software billings grew 28 percent year-over-year.
• Open Storage billings grew 63 percent year-over-year.
• Solaris-based SPARC CMT Servers billings grew 3 percent year-over-year.
• Reduced R&D and SG&A expenses nearly 15 percent year-over-year.