INDUSTRY

Sun Microsystems on Tuesday reported an unexpected quarterly profit versus a year-ago loss as revenue rose 7 percent, fueled by higher sales of its servers, and its shares jumped 8 percent. Sun said it had a fiscal second-quarter net profit of $126 million, or 3 cents per share, compared with a net loss of $223.0 million, or 7 cents per share, a year ago. Revenue rose to $3.57 billion from $3.34 billion. Sun said the increase in its revenue was due to an uptick of sales of its servers and the acceptance of its Solaris 10 operating system. Since Sun made Solaris freely available, more than 7 million copies of it have been downloaded, Sun Chief Executive Jonathan Schwartz said on Monday. "The company had a very good quarter with the return to profitability," said Pacific Crest Securities analyst Brent Bracelin. "Clearly there is momentum with the new product upgrades." "What I see here that is encouraging is 14 percent year-over-year growth in their computer systems, which is decent, good, strong," said Gartner analyst and managing vice president Martin Reynolds. "Sun's financial performance this quarter demonstrates that our strategy and discipline are paying off," Schwartz said in a statement. Sun also said on Tuesday that KKR Private Equity Investors, the public fund of private equity firm Kohlberg Kravis Roberts & Co, will get a seat on Sun's board in exchange for a $700 million investment in the company. "We certainly don't need the money," Schwartz said on a conference call. "It's an opportunistic transaction." Sun ended the quarter with $4.8 billion in cash and short-term investments.