INDUSTRY

SANTA CLARA, CA -- Sun Microsystems, Inc. (NASDAQ: SUNW) a leader in systems and solutions that make the Net work, reported results yesterday for its fiscal third quarter which ended March 31, 2002. Revenues for the third quarter were $3.1 billion, essentially flat, as compared with the $3.1 billion in revenues reported for the second quarter of fiscal year 2002. Net loss for the third quarter was $26 million and the net loss per share was $.01, a sequential improvement of 67% over the net loss per share reported for the second quarter of fiscal year 2002 (excluding losses incurred during such periods on Sun's equity investment portfolio, restructuring charges/adjustments, and related tax effects). During the fiscal third quarter of 2002, special items increased the net loss by $11 million, resulting in a GAAP net loss of $37 million and a GAAP net loss per share of $.01. Sun's Chairman and CEO, Scott McNealy stated, "Despite the challenging economic environment, we've protected our investments in R&D while winning customers in new markets. In addition to announcing our strategic initiatives around Linux and N1, Sun continued to generate innovative new products. Over the last 90 days, we've introduced the new Sun Blade[tm] 2000 workstation with dual 1.05-Ghz UltraSPARC® III processors, the new Sun Cobalt Qube[tm] 3 server appliance for home networks and small businesses, and the new Sun Fire[tm] V100, a single-processor, general-purpose server for under $1,000. We also launched a number of storage products: The Sun StorEdge[tm] 3900 and 6900 series, new file systems and software suites, and expanded storage services, to name a few. To establish an open, end-to-end network identity infrastructure, we introduced the Sun[tm] Open Net Environment Platform for Network Identity. And just last week, we filled the space between the top of our midrange line and our flagship Sun Fire 15K with the new Sun Fire 12K server -- a great way for customers to contain costs while still allowing for future growth." McNealy continued, "We're continuing to make progress in diversifying our customer portfolio by building momentum in new markets. Examples of such diverse customers that have recently chosen Sun products include BP, Cray Inc., UK Office of Government Commerce, Georgia Technology Authority, Lockheed Martin, Province of Ontario Ministry of Transportation, and Comisión Federal de Electricidad for a big SAP implementation in Latin America. Plexxikon chose Sun in life sciences, and H.E. Butt Grocery selected Sun for a five-year multimillion dollar contract for enterprise servers, infrastructure software and middleware, as well as professional and maintenance services. Also, we continued to win business in our more traditional markets as Nextel and EDS chose Sun as the platform provider of choice for a $234 million, five-year IT outsourcing agreement." "In addition to funding R&D," McNealy said, "we're making major investments in global marketing. `We make the Net work,' features pervasively throughout all areas of our integrated marketing campaign; from new advertising to the web and communications. It reflects our long-held vision of The Network Is The Computer[tm]. Our software brands, including iPlanet[tm], Forte[tm], StarOffice[tm], and Chili!Soft[tm], have come together under the Sun[tm] ONE brand. This better reflects the real value of Sun's industry-leading software portfolio, streamlines our marketing efforts, and reflects our global leverage and emphasis in software." Michael E. Lehman, Sun's Executive Vice President of Corporate Resources and Chief Financial Officer said, "We're pleased with the improvement to our overall business model this quarter. We improved our gross margin percentage by five and one-half points on a sequential basis, generated cash on an operating basis, and kept our cash and liquid marketable investment position strong at nearly $6 billion. In addition, we repurchased approximately $100 million of our own stock during the quarter. Lehman concluded, "Despite the continued general economic uncertainties, Sun is improving its financial position while continuing to invest in product development and core competencies to promote the long-term growth of the company."