Shares in Sun Microsystems jumped 10 per cent

Shares in Sun Microsystems jumped 10 per cent in after-hours trading in New York after the server and software maker reported its third consecutive profitable quarter and its first full-year profit since the dot-com boom of 2001.

Fourth-quarter profits came in ahead of Wall Street’s expectations, bolstered by lower expenses and improved demand for Sun’s open-source operating system, which offset slow growth in sales of the group's older systems.

The company reported net earnings of $329 million (£162 million), or 9 cents per share, for the three months to June 30, compared with a $301 million loss for the same period a year earlier. Analysts had expected net earnings of around 5 cents a share.

Revenues were flat at $3.84 billion. Fourth-quarter operating profit margins hit 8.5 per cent, boosted by cheaper component costs and beating the 4 per cent target set by the group in May 2006.

The figures signal a rebound in Sun’s fortunes after the group posted losses of more than $5 billion since the dot-com bust.

The company has been aggressively cutting costs since Jonathan Schwartz took over as chief executive in April 2006, taking over from co-founder Scott McNealy.

In the latest quarter, operating expenses were down nearly 25 per cent, to $1.49 billion. The improvement follows 4,000 job cuts last year.

Mr Schwartz said: "With a solid strategy and consistent execution, we delivered on our commitment to achieve at least 4 per cent operating margin in the fourth quarter.

"This milestone marks significant progress toward our longer-term growth plan of at least 10 per cent operating margin for the full fiscal year 2009."

For the full year, Sun’s revenues were $8.8 billion, up 5 per cent from the previous year. Net income showed a profit of $473 million, compared with a loss of $864 million last year.

Mr Schwartz said: “We said we would be running a growing, profitable company a year ago, and we did exactly what we said.”

However, the group is still a long way from recapturing its stature during the dot-com boom. Sun’s last profitable year was 2001, when it rang up more than $18 billion in sales and posted profits of more than $920 million.

Sun said it expects revenue growth for fiscal year 2008 to be in the low to mid-single digits.

Sun’s shares rose 49 cents to $5.38 in after-hours trading yesterday.

source:business.timesonline.co.uk