Net loss for the first quarter of fiscal 2009 on a GAAP basis was $1.677 billion, or $(2.24) per share on a diluted basis, as compared with a net income of $89 million, or $0.10 per share, for the first quarter of fiscal 2008. GAAP net loss per share includes a $1.445 billion non-cash charge for goodwill impairment. It also includes a restructuring charge of approximately $63 million pursuant to the restructuring that commenced in the fourth quarter of fiscal 2008.

On a non-GAAP basis, net loss for the first quarter of fiscal 2009 was $65 million, or $(0.09) per share on a diluted basis, as compared with a non-GAAP net income of $285 million, or $0.32 per share, for the first quarter of fiscal 2008. Non-GAAP net loss per share excludes amortization of acquisition-related intangibles, stock-based compensation, restructuring and related impairment of long-lived assets, the goodwill impairment charge, net gain on equity investments and the tax effect of these non-GAAP adjustments.

Sun ended the quarter with a cash and marketable debt securities balance of $3.121 billion and generated cash flow from operations for the first quarter of fiscal 2009 of $148 million.

"Although we saw another quarter of growth in our Solaris-based Chip Multi-Threading and Open Storage systems, the economic downturn continued to weigh on our customers, especially those that contribute to our traditional high-end businesses", stated Jonathan Schwartz, CEO of Sun Microsystems. "With a continued focus on operational alignment, a strong cash position, and the market increasingly looking to open source innovation as a vehicle to escape proprietary vendor pricing, we believe Sun is well positioned to weather the downturn and ultimately become the biggest beneficiary in the open source revolution in both systems and software."

First quarter highlights include:

• Sun reported 83 percent year-over-year billings growth in its Solaris-based Chip Multi-Threading systems as customers continued to demand the nearly 10,000 applications available for Solaris 10, while enjoying integrated virtualization and exceptional power efficiency.
• Sun's Solaris-based Open Storage product line continued to see aggressive growth during the quarter as the adoption of ZFS - the most advanced file system available in the open source community - and open systems continue to be ever more critical for addressing customer pain points in today's challenging economic environment.
• Sun reported 12 percent year-over-year revenue growth in the Emerging Markets region, with India, Latin America and a combined Russia, Middle East and Africa geography growing double digits year-over-year.
• Sun announced a new version of Sun xVM VirtualBox as well as xVM VirtualBox Software Enterprise Subscription, offering 24/7 premium support for enterprise users. Sun xVM VirtualBox also surpassed 6.5 million downloads worldwide and 15,000 downloads per day.
• Sun partnered with Fujitsu on a new enhanced line of SPARC Enterprise servers that deliver a virtualization and consolidation platform with up to 80 percent better performance on commercial applications and 2x better performance on HPC workloads and using 44 percent less energy per core.

Based on a combination of factors, including the current economic environment, Sun's operating results, and a sustained decline in Sun's market capitalization, the company concluded that there were sufficient indicators to require Sun to perform an interim goodwill impairment analysis as of September 28, 2008. Sun has not yet completed this analysis. The company has concluded, however, that an impairment loss can be reasonably estimated. Accordingly, the company has recorded a $1.445 billion non-cash goodwill impairment charge during the first quarter of fiscal 2009. The company expects to finalize its goodwill impairment analysis during the second quarter of fiscal 2009, and may make an adjustment to that charge or record an additional non-cash goodwill impairment charge when the goodwill impairment test is completed.