On Monday, Nov. 5, data center conqueror Sun Microsystems (NASDAQ:JAVA) released first-quarter 2008 earnings for the period ended Oct. 1, 2007.

  • This was the fourth consecutive quarter of positive net income for Sun -- the first such streak since mid-2001. The company has been consistently cash flow-positive for years, though.
  • Let's talk some more history. Gross margins haven't been this wide since June 2000, but operating margins are suffering from restructuritis. Sun spent $113 million on restructuring charges this quarter, which was more than the $97 million spent all of last year.
  • The numbers are nice, but they don't tell the whole story. Check out what else Sun is doing over here.

(Figures in millions, except per-share data)

Income Statement Highlights

Q1 2008

Q1 2007

Change

Sales

$3,219

$3,189

0.9%

Net Profit

$89.0

($56.0)

N/A

EPS

$0.03

($0.02)

N/A

Diluted Shares

3,537

3,497

1.1%

Get back to basics with the income statement.

Margin Checkup

Q1 2008

Q1 2007

Change*

Gross Margin

48.5%

43.5%

5.0

Operating Margin

2.0%

(2.0%)

4.0

Net Margin

2.8%

(1.8%)

4.5

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q1 2008

Q1 2007

Change

Cash + ST Invest.

$3,819.0

$3,971.0

(3.8%)

Accounts Rec.

$2,203.0

$2,036.0

8.2%

Inventory

$571.0

$584.0

(2.2%)

Liabilities

Q1 2008

Q1 2007

Change

Accounts Payable

$1,140.0

$1,292.0

(11.8%)

Long-Term Debt

$1,270.0

$582.0

118.2%

The balance sheet reflects the company's health.

Cash Flow Highlights

Q1 2008

Q1 2007

Change

Cash From Ops.

$574.0

$123.0

366.7%

Capital Expenditures

$127.0

($160.0)

N/A

Free Cash Flow

$447.0

$283.0

58.0%

Owner Earnings

$268.0

$329.0

(18.5%)

Free cash flow is a Fool's best friend.

Competitive Context

Market Cap

Trailing P/E Ratio

CAPS Rating

Microsoft (NASDAQ:MSFT)

$338,290

23.7

***

International Business Machines
(NYSE:IBM)

$154,140

16.6

***

Hewlett-Packard (NYSE:HPQ)

$136,660

21.4

****

Dell (NASDAQ:DELL)

$67,170

23.9

**

EMC (NYSE:EMC)

$48,950

32.8

*****

Sun Microsystems

$18,710

40.4

***

Using the latest reported numbers from Capital IQ. Nobody is anybody without some context.

Related Foolishness: