Updated from July 20Sun Microsystems ( SUNW) shares were down Wednesday amid mixed reactions to its fiscal fourth-quarter report. After the close Tuesday, Sun delivered earnings per share a penny greater than expectations on stronger-than-expected revenue. Still, the stock was recently off 8 cents, or 2%, to $4.04. In a note underscoring Wall Street's standoff interest in Sun's latest turnaround bid, First Albany's Joel Wagonfeld said June results "suggest Sun's new pricing and go-to-market strategies have begun to drive footprint and revenue, potentially setting the stage for more sustainable -- and profitable -- growth. However, the company's business model is still evolving, its pricing strategies remain unproven and operating leverage remains elusive." Though guidance was limited, management outlined a $500 million reduction in operating expenses for fiscal year 2005, which just got under way. In light of those predictions, Wagonfeld increased his fiscal year 2005 estimate to a profit of 3 cents, up from a loss of 2 cents, on revenue of $11.9 billion, up from $11.2 billion. "Valuation looks compelling on many metrics, and net cash of $1.86 per share provides downside protection, resulting in an improving risk/reward," wrote Wagonfeld. "We could see the shares trading somewhat higher, but we think they will likely remain range-bound as investors wait for evidence that Sun can successfully drive revenue growth, extend share in new markets, take out costs and increase operating leverage -- all while defending its core customer base and business segments." (He's maintaining a neutral rating on the stock; First Albany hasn't done banking for Sun.) Under generally accepted accounting principles, Sun reported a "preliminary" profit of $795 million, or 24 cents a share, in the fourth quarter, which ended June 30. But that includes $1.6 billion of other income and $350 million in deferred other income related to the settlement of its suit against Microsoft ( MSFT). Sun said it has sought confirmation of certain accounting details related to the settlement from the Securities and Exchange Commission, and that financial results are pending final resolution of these matters.