Sun Microsystems Reports Revenues of $2.536 Billion

10/20/2003 - Sun Microsystems, Inc. (NASDAQ: SUNW), a leader in systems and solutions that make the Net work, reported results for its fiscal first quarter which ended September 28, 2003.

Revenues for the first quarter were $2.536 billion, a decline of 8 percent as compared with $2.747 billion for the first quarter of fiscal 2003. Total gross margin as a percent of revenues was 40.1 percent, a decrease of 1.1 percentage points as compared with the first quarter of fiscal 2003. Net loss for the first quarter of fiscal 2004 was $286 million or $0.09 per share compared with a net loss of $111 million or a net loss of $0.04 per share for the first quarter of fiscal 2003.

Steve McGowan, Sun's Chief Financial Officer and Executive Vice President, Corporate Resources, said, "Despite our challenges this quarter, we reached the highest level of services revenue ever for a fiscal first quarter and we made strong gains in the 1-2 way server market. We reduced SG&A expenses by $84 million year over year, and although cash flow from operations was a negative $49 million, we exited the quarter with a cash and marketable securities position of over $5.5 billion."

Commenting on major initiatives in the quarter, Scott McNealy, Chairman, President and CEO, said, "While we have work to do, we made progress on key initiatives that will drive revenue going forward. Our quarterly Network Computing launch, NC03Q3, delivered over 30 breakthrough innovations, including the Sun Java Enterprise System which makes serious software simple at industry-beating price points. We continued to execute on our low-cost computing strategy as we saw an increase in demand for Sun x86 systems. We completed the acquisition of CenterRun, furthering our N1 strategy to automate network computing, adding 60 new customers this quarter. And our systems value proposition continued to resonate with increasing storage attach rates. We are delivering innovation, choice and value like never before and continued execution of this strategy will pay-off in revenue generation over the long-run."

About Sun Microsystems, Inc.
Since its inception in 1982, a singular vision -- "The Network Is The Computer" -- has propelled Sun Microsystems, Inc. (Nasdaq: SUNW) to its position as a leading provider of industrial-strength hardware, software and services that make the Net work. Sun can be found in more than 100 countries and on the World Wide Web at http://sun.com

This news release contains forward-looking statements regarding the future results and performance of Sun Microsystems, Inc., including statements relating to key initiatives that will drive revenue going forward, the Sun Java Enterprise System making serious software simple at industry-beating price points, delivering innovation, choice and value like never before and continued execution of this strategy and the resulting pay-off in revenue generation over the long-run. Such statements are just predictions and involve risks and uncertainties such that actual results and performance may differ materially. Factors that might cause such a difference include risks associated with continued adverse macroeconomic conditions in the U.S. and internationally, including adverse business conditions in the specific markets for Sun's products, increased competition, lack of success in the timely development, production and acceptance of new products and services and in technical advancements, and the failure to manage costs and improve operating efficiencies. These and other risks are detailed from time to time in Sun's periodic reports that are filed with the Securities and Exchange Commission, including Sun's annual report on Form 10-K for the fiscal year ended June 30, 2003.

Sun, Sun Microsystems, the Sun logo, Java, N1 and The Network Is The Computer are trademarks or registered trademarks of Sun Microsystems, Inc. in the United States and in other countries.

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