Sun Pre-Announces Flat Sales, Higher Profits for Fiscal Q2

Published: January 17, 2008

by Timothy Prickett Morgan

In addition to announcing its deal to acquire open source database maker MySQL for $800 million in cash and $200 million in stock options, Sun Microsystems also tried to give Wall Street a little brighter news on its progress toward profits. Wall Street could use some good news right about now, as could Main Street, now that I think about it.

In any event, Sun pre-announced some of its financial results for its fiscal second quarter ended December 30 to try to build an even bigger upward wave in its share price--I said try, since Sun's stock price was only up 3.67 percent to $15.53 a share as the markets closed on Wednesday in the wake of the MySQL deal and the pre-announced financials. Sun said that it expected to post around $3.6 billion in sales for the second quarter of fiscal 2008, up 1 percent compared to the year ago quarter, with net bookings up 7 percent to $3.85 billion. Sun added that it expected gross margins to be in the range of 48 percent, up 3 points compared to a year ago, and that net income would come to $230 million to $265 million, or between 28 cents and 32 cents per share. This is at least twice as good as the $113 million in net income Sun booked in the second quarter of fiscal 2007, which worked out to 15 cents per share.

"Our preliminary results for the second quarter reflect solid execution and continued operational progress," explained Jonathan Schwartz, Sun's president and chief executive officer, in a statement. "The future is even brighter today as evidenced by our agreement to acquire MySQL, one of the fastest growing players in the $15 billion database market and a key component of many of the Web's premier properties such as Facebook, Wikipedia, China Mobile and Baidu. As the market for open source databases continues its spectacular growth, we look forward to this acquisition directly contributing to Sun's growth as the platform of choice for the Web economy."

Capitalizing on that database wave is going to be just as hard as capitalizing on the Solaris wave. But Sun has little option but to give it a whirl.

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