Sun Swings to Profit
Updated from 4:40 p.m. EST
SAN FRANCISCO -- Sun Microsystems (JAVA) raised its profit margin estimates for the year, as it delivered its fourth consecutive quarter in the black after Monday's close.
But a stubbornly sluggish top line continued to dog the company, pushing its shares down in extended trading.
The Santa Clara, Calif., company mustered meager 1% year-over-year sales growth in its fiscal first quarter, with revenue of $3.22 billion. Analysts polled by Thomson Financial were looking for $3.27 billion in revenue, the equivalent of 2.4% year-over-year growth.Sun executives stressed that the company is committed to doing better, with CEO Jonathan Schwartz describing top-line growth as "absolutely our No. 1 priority" in the current fiscal year. He pointed to strong orders for Sun's Niagara servers, up 70% year over year, and industry-standard servers based on Intel (INTC) and Advanced Micro Devices (AMD) microprocessors, up 10%, as indicators of increasing demand. "We think we're going to be more exposed to that growth," Schwartz said in a post-earnings conference call. That exposure apparently won't be enough to bump Sun's full-year revenue expectations, which continues to call for low-to-midsingle-digit growth. While Sun did raise its full-year gross margin estimate by one percentage point to a range of 44% to 47%, the company acknowledged that some of that upside is simply the result of lower-than-expected component costs.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV