Sun reports strong profits but little growth

Sun doubled its profit in the quarter ended Dec. 30, although revenue was nearly flat compared with the same period a year earlier, the company announced Thursday.

Net income for the quarter, the second of Sun's fiscal year, was $260 million, or $0.31 per share, up from $133 million and $0.15 per share in the same quarter of fiscal 2006, the company announced Thursday.

Revenue was $3.62 billion, up just 1.4 percent from the same quarter a year earlier. The growth came from Sun's services business, where revenue climbed 5 percent. Sales of servers and storage products, which account for about two-thirds of Sun's business, declined by 0.5 percent.

Business was particularly slow in the U.S., where revenue declined 8 percent year over year. The EMEA (Europe, Middle East, and Africa) region performed better with growth of 7 percent. EMEA accounted for 39 percent of revenue in the quarter, overtaking the U.S., which is usually Sun's biggest source of revenue.

Despite the quarter's slow growth, Sun said its full-year growth would be better. On a conference call, Chief Financial Officer Mike Lehman said revenue for fiscal 2008 would increase in the "low-to-mid single digits" and predicted revenue growth in the second half of greater than 5 percent.

Sun's profit benefited from its ongoing cost-cutting plan, which has included several hundred layoffs so far. Its $260 million profit included a restructuring charge of $32 million.

Sun announced a surprise plan last week to buy MySQL, the biggest open-source database vendor, for $1 billion. Sun officials said Thursday they are unsure whether the MySQL acquisition will close in the second or third quarter, and have not yet calculated the long-term impact on Sun's financials. They expect to take a one-time charge of $30 million to $50 million when the deal closes.