Sun wins $400 million deal from AOL
Dulles, Va.-based America Online Inc. will purchase $400 million worth of equipment from Sun Microsystems Inc. over the next two years under an agreement announced by the two companies.
The Sun equipment will be used to serve the needs of more than 26 million AOL members, 2.8 CompuServe members and millions of users of other AOL-owned brands, such as ICQ and Netcenter, according to a Sun statement released yesterday.
With this announcement, AOL has committed to spending $900 million on Sun equipment to date.
The company already has more than 4,000 Sun servers and uses a wide range of Sun software, including the iPlanet e-commerce suite from an earlier Sun alliance with Netscape Communications Inc.
The AOL deal comes at a time when Sun, like other major hardware vendors, is facing a predicted slowdown in IT spending.
Yesterday, Sun became the second major hardware vendor this week to meet analyst expectations when it
declared profits of $552 million on revenue of $5.12 billion for the quarter ended Dec. 31. The numbers represent a 56% increase in profits and a 44% increase in revenue over the same period last year.
Despite making the numbers for the last quarter, Sun said it expected sales to slow slightly in the second half of its fiscal year because of a drop-off in customer demand. The news dragged down Sun shares by more than 12% at one point today.
"Sun turned out some pretty impressive numbers," said James Garden, an analyst at Technology Business Research Inc. in Nashua, N.H. "They were one of the few vendors who did not downgrade expectations and yet managed to meet the numbers."
Earlier in the week, IBM beat analyst expectations when it announced earnings of $2.7 billion on revenue of $25.6 billion.
IBM officials remained confident of the year ahead, citing continued e-business demand.
» posted by ITworld staff
Computerworld
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