Sun Microsystems, Inc. (NASDAQ:JAVA) reported results today for its fiscal second quarter, which ended December 30, 2007.
SANTA CLARA, Calif. (Business Wire EON) January 24, 2008 --
Sun Microsystems, Inc. (NASDAQ:JAVA) reported results today for its
fiscal second quarter, which ended December 30, 2007.
Revenues for the second quarter of fiscal 2008 were $3.615 billion, an
increase of approximately 1.4 percent as compared with $3.566 billion
for the second quarter of fiscal 2007. Total gross margin as a percent
of revenues was 48.5, an increase of 3.5 percentage points, as compared
with the second quarter of fiscal 2007.
Net income for the second quarter of fiscal 2008 on a GAAP basis was
$260 million, or $0.31 per share(1), as compared
with a net income of $133 million, or $0.15 per share, for the second
quarter of fiscal 2007. GAAP net income for the second quarter of fiscal
2008 included a $32 million restructuring charge.
Cash generated from operations for the second quarter of fiscal 2008 was
$336 million, and the cash and marketable debt securities balance at the
end of the quarter was $4.677 billion.
"Today's results clearly demonstrate steady progress against our
financial targets and highlight the accelerating demand set to fuel
growth in the back half of the fiscal year," said Jonathan Schwartz, CEO
of Sun Microsystems. “Headlining the results
were improved margins and strong bookings along with double digit growth
in emerging markets including India, China, Latin America, Eastern
Europe, the Middle East and Africa. Adding to the momentum were the
SolarisTM Operating System OEM agreement with
Dell and our introduction of the industry's first open source datacenter
virtualization and management platform, Sun xVM."
Sun has scheduled a conference call today to discuss its financial
results for the second quarter fiscal year 2008 at 1:30 p.m. (PT), which
is being broadcast live at www.sun.com/investors.
Sun's Annual Analyst Summit (SAS) will be held February 4-6 in San
Francisco, Calif. Financial analysts and portfolio managers who wish to
attend in person are invited to register at www.cplan.com/sunanalyst2008.
The general public is invited to attend online at www.sun.com/investors.
About Sun Microsystems, Inc.
Sun Microsystems develops the technologies that power the global
marketplace. Guided by a singular vision -- "The Network is the ComputerTM"
-- Sun drives network participation through shared innovation, community
development and open source leadership. Sun can be found in more than
100 countries and on the Web at http://sun.com
Sun, Sun Microsystems, the Sun logo, Solaris, Java and The Network is
the Computer are trademarks or registered trademarks of Sun
Microsystems, Inc. in the United States and other countries.
(1) Basic and diluted net income per share have been retrospectively
restated to reflect the one-for-four reverse stock split effective
November 12, 2007.
This press release contains forward-looking statements regarding the
future results and performance of Sun Microsystems, Inc., including
statements regarding demand and expectations for growth in the second
half of the fiscal year. These forward-looking statements involve risks
and uncertainties and actual results could differ materially from those
predicted in any such forward-looking statements. Factors that could
cause Sun's actual results to differ materially from those contained in
such forward-looking statements include: risks associated with
developing, designing, manufacturing and distributing new products; lack
of success in technological advancements; pricing pressures; lack of
customer acceptance and implementation of new products and technologies;
the possibility of errors or defects in new products; a material
acquisition, restructuring or other event that results in significant
charges; competition; adverse business conditions; failure to retain key
employees; the cancellation or delay of projects; Sun's reliance on
single-source suppliers; risks associated with Sun's ability to purchase
a sufficient amount of components to meet demand; inventory risks; risks
associated with Sun's international customers and operations; delays in
product development; Sun's dependence on significant customers and
specific industries; and Sun's dependence on channel partners. Please
also refer to Sun's periodic reports that are filed from time to time
with the Securities and Exchange Commission, including its Annual Report
on Form 10-K for the fiscal year ended June 30, 2007 and its Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 2007. Sun
assumes no obligation to, and does not currently intend to, update these
forward-looking statements.
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited)
(in millions, except per share
amounts)
|
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|
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|
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|
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|
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Three Months Ended
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Six Months Ended
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December 30,
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December 31,
|
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December 30,
|
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December 31,
|
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|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|
|
|
|
|
|
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|
|
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Net revenues:
|
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|
|
|
|
|
|
|
|
Products
|
|
$
|
2,249
|
|
$
|
2,260
|
|
$
|
4,229
|
|
$
|
4,219
|
|
Services
|
|
|
1,366
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|
|
1,306
|
|
|
2,605
|
|
|
2,536
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|
Total net revenues
|
|
|
3,615
|
|
|
3,566
|
|
|
6,834
|
|
|
6,755
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|
Cost of sales:
|
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|
|
|
|
|
|
|
Cost of sales-products (including stock-based compensation expense
of $3, $4, $6 and $6) (1)
|
|
|
1,161
|
|
|
1,228
|
|
|
2,190
|
|
|
2,351
|
|
Cost of sales-services (including stock-based compensation expense
of $9, $8, $17 and $16) (1)
|
|
|
701
|
|
|
734
|
|
|
1,330
|
|
|
1,412
|
|
Total cost of sales
|
|
|
1,862
|
|
|
1,962
|
|
|
3,520
|
|
|
3,763
|
|
Gross margin
|
|
|
1,753
|
|
|
1,604
|
|
|
3,314
|
|
|
2,992
|
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Operating expenses:
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|
|
|
|
|
|
|
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Research and development (including stock-based compensation expense
of $16, $17, $31 and $34) (1)
|
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|
463
|
|
|
507
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|
|
909
|
|
|
980
|
|
Selling, general and administrative (including stock-based
compensation expense of $24, $29, $46 and $59) (1)
|
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|
995
|
|
|
978
|
|
|
1,934
|
|
|
1,936
|
|
Restructuring and related impairment of long-lived assets
|
|
|
32
|
|
|
26
|
|
|
145
|
|
|
47
|
|
Purchased in-process research and development
|
|
|
1
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|
|
-
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|
|
1
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|
|
-
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Total operating expenses
|
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1,491
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|
|
1,511
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|
|
2,989
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|
|
2,963
|
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Operating profit
|
|
|
262
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|
|
93
|
|
|
325
|
|
|
29
|
|
Gain on equity investments, net
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|
|
-
|
|
|
-
|
|
|
22
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|
|
-
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Interest and other income, net
|
|
|
53
|
|
|
63
|
|
|
111
|
|
|
105
|
|
Income before income taxes
|
|
|
315
|
|
|
156
|
|
|
458
|
|
|
134
|
|
Provision for income taxes
|
|
|
55
|
|
|
23
|
|
|
109
|
|
|
57
|
|
Net income
|
|
$
|
260
|
|
$
|
133
|
|
$
|
349
|
|
$
|
77
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share-basic (2)
|
|
$
|
0.32
|
|
$
|
0.15
|
|
$
|
0.42
|
|
$
|
0.09
|
|
Net income per common share-diluted (2)
|
|
$
|
0.31
|
|
$
|
0.15
|
|
$
|
0.41
|
|
$
|
0.09
|
|
Shares used in the calculation of net income per common share-basic (2)
|
|
|
806
|
|
|
881
|
|
|
836
|
|
|
878
|
|
Shares used in the calculation of net income per common
share-diluted (2)
|
|
|
826
|
|
|
907
|
|
|
855
|
|
|
892
|
|
|
|
|
|
|
|
|
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(1) For the three months ended December 30, 2007 and December 31,
2006, respectively.
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(2) Basic and diluted shares and basic and diluted net income per
share have been retrospectively restated to reflect the one-for-four
reverse stock split effective November 12, 2007
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SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in
millions)
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|
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|
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December 30,
|
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June 30,
|
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|
|
2007
|
|
2007(1)
|
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|
|
(unaudited)
|
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ASSETS
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Current assets:
|
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Cash and cash equivalents
|
|
$
|
2,214
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|
$
|
3,620
|
|
Short-term marketable debt securities
|
|
|
1,219
|
|
|
962
|
|
Accounts receivable, net
|
|
|
2,789
|
|
|
2,964
|
|
Inventories
|
|
|
631
|
|
|
524
|
|
Deferred and prepaid tax assets
|
|
|
213
|
|
|
200
|
|
Prepaid expenses and other current assets
|
|
|
1,093
|
|
|
1,058
|
|
Total current assets
|
|
|
8,159
|
|
|
9,328
|
|
|
|
|
|
|
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Property, plant and equipment, net
|
|
|
1,569
|
|
|
1,533
|
|
Long-term marketable debt securities
|
|
|
1,244
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|
|
1,360
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|
Goodwill
|
|
|
2,496
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|
|
2,514
|
|
Other acquisition-related intangible assets, net
|
|
|
493
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|
|
633
|
|
Other non-current assets
|
|
|
518
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|
|
470
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|
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$
|
14,479
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|
$
|
15,838
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
|
|
|
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|
|
Accounts payable
|
|
$
|
1,312
|
|
$
|
1,381
|
|
Accrued payroll-related liabilities
|
|
|
730
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|
|
842
|
|
Accrued liabilities and other
|
|
|
1,133
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|
961
|
|
Deferred revenues
|
|
|
2,049
|
|
|
2,047
|
|
Warranty reserve
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|
211
|
|
|
220
|
|
Total current liabilities
|
|
|
5,435
|
|
|
5,451
|
|
|
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|
|
|
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Long-term debt
|
|
|
1,273
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|
|
1,264
|
|
Long-term deferred revenues
|
|
|
640
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|
|
659
|
|
Other non-current obligations
|
|
|
1,259
|
|
|
1,285
|
|
Total stockholders’ equity
|
|
|
5,872
|
|
|
7,179
|
|
|
|
$
|
14,479
|
|
$
|
15,838
|
|
|
|
|
|
|
|
(1) Derived from audited financial statements
|
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited, in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
December 30,
|
|
December 31,
|
|
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net income
|
|
$
|
349
|
|
|
$
|
77
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation and other amortization
|
|
|
241
|
|
|
|
257
|
|
|
Amortization of other acquisition related intangible assets
|
|
|
148
|
|
|
|
161
|
|
|
Deferred taxes
|
|
|
8
|
|
|
|
(20
|
)
|
|
Impairment of long-lived assets
|
|
|
-
|
|
|
|
12
|
|
|
Gain on investments and other, net
|
|
|
(23
|
)
|
|
|
-
|
|
|
Stock-based compensation expense
|
|
|
100
|
|
|
|
116
|
|
|
Write-off of purchased in-process research and development
|
|
|
1
|
|
|
|
-
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable, net
|
|
|
187
|
|
|
|
390
|
|
|
Inventories
|
|
|
(104
|
)
|
|
|
(89
|
)
|
|
Prepaid and other assets
|
|
|
(30
|
)
|
|
|
(7
|
)
|
|
Accounts payable
|
|
|
(110
|
)
|
|
|
(106
|
)
|
|
Other liabilities
|
|
|
143
|
|
|
|
(539
|
)
|
|
Net cash provided by operating activities
|
|
|
910
|
|
|
|
252
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Increase in restricted cash, net
|
|
|
(19
|
)
|
|
|
(10
|
)
|
|
Purchases of marketable debt securities
|
|
|
(1,030
|
)
|
|
|
(1,894
|
)
|
|
Proceeds from sales of marketable debt securities
|
|
|
509
|
|
|
|
662
|
|
|
Proceeds from maturities of marketable debt securities
|
|
|
379
|
|
|
|
296
|
|
|
Proceeds from sales of equity investments, net
|
|
|
27
|
|
|
|
7
|
|
|
Proceeds from sales (purchases of) property, plant and equipment, net
|
|
|
(235
|
)
|
|
|
79
|
|
|
Payments for acquisitions, net of cash acquired
|
|
|
(41
|
)
|
|
|
(10
|
)
|
|
Net cash used in investing activities
|
|
|
(410
|
)
|
|
|
(870
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Purchase of common stock under 2007 Stock Repurchase Plan
|
|
|
(2,000
|
)
|
|
|
-
|
|
|
Proceeds from issuance of common stock, net
|
|
|
102
|
|
|
|
138
|
|
|
Principal payments on borrowings and other obligations
|
|
|
(8
|
)
|
|
|
(476
|
)
|
|
Net cash used in financing activities
|
|
|
(1,906
|
)
|
|
|
(338
|
)
|
|
Net decrease in cash and cash equivalents
|
|
|
(1,406
|
)
|
|
|
(956
|
)
|
|
Cash and cash equivalents, beginning of period
|
|
|
3,620
|
|
|
|
3,569
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
2,214
|
|
|
$
|
2,613
|
|
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