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Sun Emerges From Cloudy 2004

Things are looking up at Sun Microsystems Inc. (Nasdaq: SUNW), with its first-quarter results boosted by sales of enterprise servers, but the company is still wrestling with its long-term restructuring plan (see Sun Posts Q1 Results).

Last night the Santa Clara, Calif.-based firm posted revenues of $2.6 billion, up nearly 4 percent on the same period last year. Sun also managed to beat analyst expectations by reporting a net income of $13 million, breaking even on a per-share basis, compared to a loss of $259 million, or 8 cents per share, a year ago. Analysts had expected Sun to report a net loss of 3 cents per share.

Speaking on a conference call last night, Sun CFO Steve McGowan explained that product revenue was driven primarily by four- to 24-way enterprise servers. Sales of servers built using the X-86 architecture rose some 36 percent year-over-year, and the company's 12-way servers have also been performing well, he said.

But the hardware giant is still overhauling its business following a difficult spell. Sun's financial outlook was much bleaker earlier this year, as it felt the heat from rival hardware and software vendors such as IBM Corp. As a result, the vendor announced plans to reduce its head count by 3,300 (see Is Sun Setting?).

Last night McGowan confirmed that some 2,900 employees have already left the company. Now he says another 600 workers will join them, bringing the total employee cull to 3,500.

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