Reporting its best quarter since 2001, Sun Microsystems yesterday posted fourth quarter and full fiscal year results which exceeded operating margin targets, improved gross margin and delivered another sequential quarter of profit.

Revenues for the fourth quarter of fiscal 2007 were $3.835-billion. For the full fiscal year, Sun reported revenues of $13.873-billion, an increase of 6.2% over fiscal year 2006. Total gross margin as a percent of revenues for the fourth quarter was 47.2%, and gross margin for the full fiscal year was 45.2%, an increase of 2.1 percentage points over fiscal year 2006. Operating margin for the fourth quarter was 8.5%.
Net income for the fourth quarter of fiscal 2007 on a GAAP basis was $329-million, or 9 cents per share on a diluted basis. For the full fiscal year, net income was $473-million, or 13 cents per share, on a diluted basis, as compared with a net loss of $864-million, or 25 cents per share, for fiscal 2006.
Cash generated from operations for the fourth quarter of fiscal 2007 was $564-million, and cash and marketable debt securities balance at the end of the quarter was approximately $5.9-billion.
"With a solid strategy and consistent execution, we delivered on our commitment to achieve at least 4% percent operating margin in the fourth quarter," says Jonathan Schwartz, president and CEO of Sun. "This milestone marks significant progress toward our longer-term growth plan of at least 10% percent operating margin for the full fiscal year 2009."
In later comments on his blog, an upbeat Schwartz paraphrased Henry Ford in summing up the year the world's third largest server manufacturer has had.
"You think you can, or you think you can't – either way, you're right," Schwartz says. "That quote struck me as the perfect summary of our fiscal year 2007 performance. We did what we said we'd do a year ago.
"We exceeded the commitments made a year ago, to restore Sun to 4% operating profitability in Q4, and did so by delivering our single best operational quarter since 2001. On an annual basis, we improved Sun's profitability by over a billion dollars. A billion. We grew revenue, expanded gross margins, streamlined our operating expenses – and closed the year with an 8% operating profit in Q4, more than double what some thought to be an aggressive target a year ago.
"We did this while driving significant product transitions, going after new markets and product areas, and best of all, while aggressively moving the whole company to open source software (leading me to hope we can officially put to rest the question, "how will you make money?")," he says.
"And we're not done – not by any stretch of the imagination," Schwartz adds. "We have more streamlining to do, more commitments to meet, more customers to serve and developers to attract. But it's evident we've got the right foundation for growing Sun – with real innovation the market values, as shown by Q4's 47% gross margins, the highest on record in five years.
"I'll be with a variety of external audiences most of this week – and I'll summarize their questions and comments in a few days. In the interim … to our customers, partners, and most of all, our amazing global employee base – thank you for thinking we could.
"You were right," Schwartz says. "Keep thinking that way. You ain't seen nothin' yet."