Sun Microsystems reported a drop in revenue for its past fiscal quarter and fiscal year, but is upbeat about the coming 12 months.
Revenue for the quarter ending 30 June was down 4.3 per cent year-over-year to $2.98bn. The vendor posted net income of $121m, down from $783m last year.
The decline in profit was expected because Sun received a large payment last year in a legal settlement with Microsoft.
The quarter also ended Sun's fiscal year in which revenues declined one per cent to $11.07bn. Sun posted a net loss of $11m, compared to a $388m loss in fiscal 2004.
In a conference call about the financials, Sun chief executive Scott McNealy was upbeat about the coming year, citing a record level in deferred revenue from previously closed deals which can only be booked in the coming fiscal year.
Although Sun reported declining sales in some of its core business, including servers and storage, several new initiatives are showing strong growth figures.
The company is in the process of becoming less reliant on sales of individual servers, and is building a broad portfolio of services to provide a complete set of enterprise solutions.
Sales of the Java Enterprise Server suite of middleware software bundles increased 104 per cent to 619,000 subscriptions in the past fiscal year and 43 per cent in the quarter.
The company claimed that sales of x86 servers that use AMD's Opteron processors were up 117 per cent, while the total number of servers shipped increased by seven per cent.
McNealy claimed strong interest in Sun's grid offering launched earlier this year, which offers computing cycles and storage capacity at a flat rate.
The vendor said in May that it had to delay the roll-out of the system to retail customers because large accounts took up all the capacity.
"The backlog of activity is just huge. We are going to be investing progressively in capital and R&D on this grid utility," McNealy said during the conference call.
Sun hinted earlier this year that it could start offering hosted desktop systems and development tools through its grid.
"We will continue to act as a consolidator in the market," said McNealy.
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