Sun Microsystems Inc urged the industry to expect its next couple of quarters to be much like the year to date, with growth of around 19%. It said it will be a couple of years before sustained growth over 20% is apparent. Playing the conservative hand, Sun also advised that the first couple of quarters of next year may be softer than anticipated but said its outlook for the fiscal year 2000 as a whole is unchanged. Why the conservative outlook? Because Sun CEO Scott McNealy believes what he sees, not what the received wisdom is. I studied economics. And economists do not have a clue, he said.
Sun reported third quarter net income up 12.5% at $261.m including a $28.7m charge for the acquisition of Maxstrat Corp over $232m last time, on revenue up 24% at $2.93bn over $2.36bn. Earnings per share before the recent two-for-one split and excluding charges were $0.71 – Wall Street’s consensus estimate was for $0.35 (after the effect of the split). Actual earnings per share were $0.63. At the nine month mark net income was up 29% at $636.16m over $489.87m on revenue which rose 19% to $8.21bn from $6.9bn.
Gross margins were down year on year to 52.4% though up sequentially. In Europe, the UK had a bad quarter – but it didn’t give details – while Germany and Belgium were strong. It’s still very cautious about the outlook in Asia/Pacific. It doesn’t think Japan is finished with its problems. Services were up 39%. The Sun/Netscape alliance will be neutral to earnings in its first year and accretive in years two and three. It claims 10,000 Java source code licensees under the community license model. It has Solaris 8 running internally. The value proposition going forwards is dot coming businesses, Sun says.
