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Looks like our quarter wasn´t that bad as many analysts and investors expected. Reuters reports in Sun Micro shares up on preliminary earnings:

Sun, the world's fourth largest business computer maker, said it expects fourth quarter net income of 5 cents to 15 cents per share, including a $100 million restructuring charge.[...]Sun on Tuesday also said it expects to post fourth quarter revenues ranging from $3.73 billion to $3.8 billion, as compared with $3.835 billion for the fourth quarter of fiscal 2007. [...] Excluding items, Sun expects to report earnings per diluted share ranging from 25 cents to 35 cents.

In after-hour trading, the SUNW stock rised to $9.88 (or 12.12%).

The Register writes in Investors stunned by Sun's apparent health:

And the company deserves credit for making the most of these moves and beating analyst expectations on the costs front. The company now seems able to post profits with consistency even during so-so quarters, which is what you want in a turnaround story.

Ein lesenswertes Interview mit Jonathan in der Frankfurter Allgemeinen Zeitung „Wir haben kurzsichtige Entscheidungen getroffen“:

Nach den Worten von Schwartz könne Sun vielmehr bei der eigenen Akquisitionsstrategie von dem finanzkräftigen Investor profitieren. Sun sei aktiv und aggressiver als noch vor einem Jahr auf der Suche nach Kaufobjekten, vor allem im Bereich lizenzgebührenfreier Programme. Dabei kämen auch Übernahmen im Volumen von mehreren Milliarden Dollar in Frage, sagt Schwartz. Sun verfügt selbst über liquide Mittel von fast 5,5 Milliarden Dollar (rund 4 Milliarden Euro).

Sun Microsystems' improved revenue, substantial progress toward sustainable profitability and return to Unix server market leadership warrant an increased vendor rating of "positive."

(Teaser abstract of the actual Gartner vendor rating)

Sounds really promising : Sun Microsystems Delivers Another Quarter of Growth and Profitability Reports Results for Third Quarter Fiscal Year 2007<. Obviously the media complaint that the increase in revenue wasn´t as high as anticipated, but in the light of upcoming annoucements (e.g. the SPARC enterprise announcement) this quite normal.
I find one different fact more interesting: Same quarter in the last year we had 6 cent loss per share. 8 cent more profit per share within a year ... i would call this good news.

SeekingAlpha points to the upgrade of SUNW by Goldman Sachs:

Laura Conigliaro, hardware analyst at Goldman Sachs, today raised her rating on Sun Microsystems (SUNW) to Buy from Neutral, following a sell-off in the stock and a presentation by the company at the Goldman Sachs technology conference in Las Vegas.

Well, there is one person, who is the authoritative source for information about the Sun/KKR-deal. And you find his comments in his blog: The Quarter, KKR, etc.

Under the headline "Barbarians on a Leash - Sun solicited KKR cash, but curbed further investment." the Red Herring tries to give some explanations about the Sun/KKR-Deal announced last week:

In answer to the most pressing question, Sun officials say this deal will not be the prelude to an exit from the public markets. In fact, the deal’s fine print includes a “standstill agreement” that bars nine-month-old KKR Private Equity Investors, the publicly traded arm of KKR, from acquiring more than 5 percent of Sun shares through the close of the deal in 2014.

An interesting tactic to keep private equity companies at bay: Other companies won´t invest, as KKR is already there with a convertible debt and KKR can´t buy more than 5 percent.

Paul Kedrosky of Seekingalpha comments the KKR-Investment in Sun and gives another good explanation for the deal:

At the same time, this was almost certainly planned as a species of deterrence. The money keeps other private equity firms at bay -- no-one is going to pester Sun to be acquired at low-low prices with KKR sitting in senior debt and having a $7.21 convertible -- so Sun can get on with business without having to deal with aggressive, low-balling suitors every five minutes, as will likely have been the case in the last twenty-four months.

Bear Stearns:

Sun Microsystems’ operating margin guidance of +4% for 4Q07 and +10% for the long term is likely to prove conservative in view of the higher-than-expected margins and revenues so far and additional opex leverage in 2H07 and beyond, the analyst says. The EPS estimates for 2007, 2008 and 2009 have been raised from $0.05 to $0.10, from $0.25 to $0.28 and from $0.35 to $0.38, respectively.

Private equity company have not the best reputation, especially in germany most people think of them as locusts, to rip out the best of the companies without ethics. Stories about Bosch/Tenovis or the deprivation of the Deutsche Telekom CEO weren´t useful to improve the reputation of private equite companies.

Now Sun got an 700 million US$ from such a private equity company. Obviously some to many people think (inside and outside of Sun): "Oh, my goodness. Locusts on board". Perhaps it´s time to put thinks into perspective. I´m not a specialist for such financial deals like convertible debts, so correct me when i´m wrong.

What is the deal ?

Shares of Sun Microsystems (SUNW - commentary - Cramer's Take - Rating) surged 7% early Wednesday after the struggling tech company scored a $700 million private placement from private equity firm Kohlberg Kravis Roberts.
Sun said the investment will take the form of $350 million of convertible senior notes due in 2012, and $350 million of convertible senior notes due 2014. The notes will be convertible, at the holder's option during specified periods, at a price of $7.21 a share.

Sun gets 700 million US-$. KKR gets convertible debt. So we get money for giving KKR stocks in a few years (2012 and 2014) . The idea behind such an invest is somewhat similar to stock options: Get stocks in the future for a reduced price. The greater the difference is, the more KKR earns. Like my options.

On the other side: We raise money for investments without going to the capital market.

It´s nothing like other deals, where an private equity fund buys a private company, makes it beautyful and sells them im pieces. This isn´t an option, as we are already public. KKR gets an seat in the board, but this is only a minority investment, so the influence stays rather small.

At the end, the immediate consequence of the deal will be a rise in confidence in SUNW. Private Equity never invest when they don´t expect profits. The surge in the stock yesterday should give an idea. They believe in our future (APL, Niagara II, Rock etc), so it´s easy money for them.

And the upside for us: I assume, we bolster up our war chest for something. No idea, what Jonathan plans, but with all i know and assume as an employee, i assume, he plans something huge. Why else should we take this money and make debts. I really believe that there will be further big news in the future besides of further profitable quarters.

6.12$ in afterhours when i´ve looked a few minutes ago. 8 percent up so far. I´m very interested how the stock reacts tomorrow at normal trading hours. Glad, i didn´t sold some of my options a week ago ... my stomach gave me a good advice ...

The confidence in SUNW seems to rise day-by-day. I reiterate my prediction: 20 US$ end of the year

Ich habe bislang ja finance.yahoo.com genutzt, um nachzugucken, wie meine Optionen gerade bewertet sind. Eher durch Zufall bin ich ueber Google Finance Beta gestolpert. Besonders interessant finde ich die Funktion, das News ueber eine Firma mit dem Chartverlauf verknüpft wird.