SYSTEMS

Sun Microsystems reported results for its fiscal third quarter, which ended April 1, 2007. Revenues for the third quarter of fiscal 2007 were $3.283 billion, an increase of 3.3 percent as compared with $3.177 billion for the third quarter of fiscal 2006. Total gross margin as a percent of revenues was 44.5 percent, an increase of 1.5 percentage points, as compared with the third quarter of fiscal 2006. Net income for the third quarter of fiscal 2007 on a GAAP basis was $67 million, or $0.02 per share on a diluted basis, as compared with a net loss of $217 million, or ($0.06) per share, for the third quarter of fiscal 2006. GAAP net income for the third quarter of fiscal 2007 included: $50 million of stock-based compensation charges, $35 million of restructuring and related impairment of assets charges, $75 million of purchase price accounting adjustments and intangible asset amortization charges related to acquisitions in fiscal 2006, benefits for $5 million of gain on equity investments, $54 million of settlement income and $8 million of related tax effects. The net impact of these six items reduced earnings per share on a diluted basis by approximately $0.02. Cash generated from operations for the third quarter of fiscal 2007 was $175 million, and cash and marketable debt securities balance at the end of the quarter was $5.486 billion. "With another quarter of profitability, we're seeing continued progress operationally, strategically and financially, and we remain committed to our fourth quarter goal of at least 4% operating profit," said Jonathan Schwartz, president and CEO of Sun Microsystems. "The performance in our Software and Services businesses confirms the broad appeal of our software offerings in the quarter, and we look forward to further extending the reach of the Solaris 10 Operating System and leveraging strong partnerships with AMD, Fujitsu and Intel. Along with disciplined financial execution, we're focused on growth and look forward to increased momentum in the fourth quarter, fueled by the continued rise of Java, increased adoption of Solaris and the competitiveness of our core systems and storage innovations."