Sun Posts Record Earnings

Sun has posted record earnings for its fiscal third-quarter, ending March 26. Revenues were $4 billion, a 37 percent increase over the $2.9 earned in the same quarter last year. Net profit was 26 cents a share.

Sun focuses on the UNIX servers in demand by Internet companies, although it has also been touting software, including its platform-independent Java technology, and its services. Apparently, Sun's areas of weakness—in storage, for example--didn't discourage sales.

In the earnings announcement, company execs pointed out that Sun outsold IBM in the market for servers used by Internet companies and also boasted that the third-quarter earnings represented its best results against HP.

The earnings report is not, in fact, good news for IBM and HP, both of which have adjusted their strategies to compete with Sun.

IBM, expected to post flat revenues when it reveals its first-quarter results next week, has been particularly hurt by the slowdown in spending caused by companies heavy spending on Y2K issues. IBM also obtains a chunk of revenue from financial services, a sector that has been in the doldrums.

Sun's news also demonstrates that HP's efforts to compete have not been completely successful. HP's flagging UNIX sales spurred a major reorganization of the company's North American sales force last year. Then, in September, the company introduced its low-end L-Class UNIX servers to compete with Sun. While HP is boosting its UNIX sales, it is far from dislodging Sun from its top place in the market.