Exhibit 99.1

Sun Microsystems Reports Results for the Second Quarter Fiscal Year 2009

SANTA CLARA, Calif. - January 27, 2009 - Sun Microsystems, Inc. (NASDAQ: JAVA) reported results today for its second quarter of fiscal 2009, which ended December 28, 2008.

Revenues for the second quarter of fiscal 2009 were $3.220 billion, a decrease of 10.9 percent as compared with $3.615 billion for the second quarter of fiscal 2008, and an increase of 7.7 percent as compared with $2.990 billion for the first quarter of fiscal 2009. Total gross margin as a percent of revenues was 41.9, a decrease of 6.6 percentage points as compared with the second quarter of fiscal 2008 and an increase of 1.7 percentage points as compared with the first quarter of fiscal 2009.

Net loss for the second quarter of fiscal 2009 on a GAAP basis was $209 million, or $(0.28) per share on a diluted basis, as compared with a net income of $260 million, or $0.31 per share, for the second quarter of fiscal 2008, and compared with a net loss of $1.677 billion, or $(2.24) per share, for the first quarter of fiscal 2009. GAAP net loss per share includes a restructuring charge of $222 million primarily related to the restructuring announcement of November 2008.

On a non-GAAP basis, net income for the second quarter of fiscal 2009 was $114 million, or $0.15 per share on a diluted basis, as compared with a non-GAAP net income of $409 million, or $0.50 per share, for the second quarter of fiscal 2008, and compared with a non-GAAP net loss of $65 million, or $(0.09) per share, for the first quarter of fiscal 2009. Non-GAAP net income per share excludes purchased in-process research and development, amortization of acquisition-related intangibles, stock-based compensation, restructuring and related impairment of long-lived assets, impairment of goodwill, net gain or loss 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 $3.008 billion and generated cash flow from operations for the second quarter of fiscal 2009 of $36 million.

“It’s great to see customers so aggressively embracing open source software, from Solaris^TM to MySQL^TM, alongside Sun’s new open source storage platforms as a means of radical cost reduction,” said Jonathan Schwartz, CEO of Sun Microsystems.

Second Quarter Highlights

• Grew billings at double-digit rates year over year in key growth categories, which accounted for more than one-third of total products billings in the second quarter of fiscal 2009 versus 23 percent in the second quarter of fiscal 2008:

^¡ The category of Solaris-based Chip Multi-Threading systems grew 31 percent year over year, and is now at an approximately $1.4 billion annual run rate, based on first and second quarter fiscal 2009 results.

^¡ The category of Total Software grew 21 percent year over year, and is now at an approximately $600 million annual run rate, based on first and second quarter fiscal 2009 results.

^¡ The category of X64 servers grew 11 percent year over year, and is now at an approximately $700 million annual run rate, based on first and second quarter fiscal 2009 results.

^¡ The category of Open Storage grew 21 percent year over year, and is now at an approximately $100 million annual run rate, based on first and second quarter fiscal 2009 results.

• Increased products gross margin 4 percentage points sequentially, primarily due to lower component costs, disciplined pricing and discounting, and a slightly positive mix impact.

• Launched the flash-based, Sun Storage 7000 family (Amber Road) in November 2008, built upon the popular ZFS^TM file system. Download ZFS here: http://www.sun.com/software/solaris/get.jsp

• Announced a restructuring initiative in November 2008 that is expected to reduce total costs by $700-800 million annually; most of this benefit is expected to be realized in fiscal 2010.

Sun will host a conference call today to review the complete financial results beginning at 1:30 p.m. PT / 4:30 p.m. ET. The general public can access the financial results and listen to the call via Sun’s Investor Relations website at www.sun.com/investors.

Safe Harbor

This press release contains forward-looking statements regarding the future results and performance of Sun Microsystems, Inc., including statements regarding customer acceptance of Sun’s open source software and expected cost reductions from Sun’s restructuring initiative and the timing thereof. These forward-looking statements involve risks and uncertainties and actual results could differ materially from those predicted in any such forward-looking statements. Factors that could cause Sun’s actual results to differ materially from those contained in such forward-looking statements include: Sun’s ability to implement the workforce reductions in various geographies; possible changes in the size and components of the expected costs and charges associated with the restructuring initiative; competition; pricing pressures; the complexity of Sun’s products and the importance of rapidly and successfully developing and introducing new products; Sun’s dependence on significant customers, specific industries and geographies; delays in product development or customer acceptance and

implementation of new products and technologies; Sun’s ability to implement a new enterprise resource planning system; a material acquisition, restructuring or other event that results in significant charges; failure to successfully integrate acquired companies; reliance on single-source suppliers; risks associated with Sun’s ability to purchase a sufficient amount of components to meet demand; inventory risks; risks associated with the quality of Sun’s products; risks associated with international customers and operations; Sun’s dependence on channel partners; failure to retain key employees; and risks associated with Sun’s ability to achieve expected cost reductions within expected time frames. Please also refer to Sun’s periodic reports that are filed from time to time with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2008 and its Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2008. Sun assumes no obligation to, and does not currently intend to, update these forward-looking statements.

To supplement Sun’s preliminary financial results presented in accordance with GAAP, Sun provides non-GAAP net income and non-GAAP net income per share data on a diluted basis. The presentation of these non-GAAP financial measures should be considered in addition to Sun’s GAAP results and are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Sun’s management believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding certain gains, losses and charges that may not be indicative of Sun’s core business operating results. Sun believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Sun’s performance. These non-GAAP financial measures also facilitate comparisons to Sun’s historical performance and its competitors’ operating results. Sun includes these non-GAAP financial measures because management believes they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. Non-GAAP measures are reconciled to comparable GAAP measures in the table entitled “Calculation of Non-GAAP Net Income (Loss)” following the text of this press release.

About Sun Microsystems, Inc.

Sun Microsystems develops the technologies that power the global marketplace. Guided by a singular vision — “The Network is the Computer^TM” — Sun drives network participation through shared innovation, community development and open source leadership. Sun can be found in more than 100 countries and on the Web at http://sun.com.

# # #

Sun, Sun Microsystems, the Sun logo, Java, Solaris, MySQL, ZFS, and The Network Is The Computer are trademarks or registered trademarks of Sun Microsystems, Inc. or its subsidiaries in the United States and other countries.

Investor Contact:

Ron Pasek

650-786-8008

ron.pasek@sun.com

Press Contact:

Kristi Rawlinson

650-786-6933

kristi.rawlinson@sun.com

Industry Analyst Contact:

Kathy Engle

415-294-4368

kathy.engle@sun.com

SUN MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in millions, except per share amounts)

	Three Months Ended					Six Months Ended
	December 28, 2008			December 30, 2007		December 28, 2008			December 30, 2007
Net revenues:
Products	$	1,939		$	2,249	$	3,703		$	4,229
Services		1,281			1,366		2,507			2,605
Total net revenues		3,220			3,615		6,210			6,834
Cost of sales:
Cost of sales-products		1,180			1,161		2,323			2,190
Cost of sales-services		690			701		1,336			1,330
Total cost of sales		1,870			1,862		3,659			3,520
Gross margin		1,350			1,753		2,551			3,314
Operating expenses:
Research and development		411			463		834			909
Selling, general and administrative		916			995		1,836			1,934
Restructuring charges and related impairment of long-lived assets		222			32		285			145
Purchased in-process research and development		—			1		—			1
Impairment of goodwill		—			—		1,445			—
Total operating expenses		1,549			1,491		4,400			2,989
Operating income (loss)		(199	)		262		(1,849	)		325
Gain (loss) on equity investments, net		(3	)		—		5			22
Interest and other income (expense), net		10			53		(1	)		111
Income (loss) before income taxes		(192	)		315		(1,845	)		458
Provision for income taxes		17			55		41			109
Net income (loss)	$	(209	)	$	260	$	(1,886	)	$	349
Net income (loss) per common share-basic	$	(0.28	)	$	0.32	$	(2.53	)	$	0.42	(1)
Net income (loss) per common share-diluted	$	(0.28	)	$	0.31	$	(2.53	)	$	0.41	(1)
Shares used in the calculation of net income (loss) per common share-basic		743			806		746			836	(1)
Shares used in the calculation of net income (loss) per common share-diluted		743			826		746			855	(1)

(1) Amounts have been restated to reflect the one-for-four reverse stock split effective November 12, 2007.

SUN MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

	December 28, 2008			June 30, 2008 (1)
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,630		$	2,272
Short-term marketable debt securities		1,014			429
Accounts receivable, net		2,574			3,019
Inventories		592			680
Deferred and prepaid tax assets		211			216
Prepaid expenses and other current assets, net		1,087			1,218
Total current assets		7,108			7,834
Property, plant and equipment, net		1,645			1,611
Long-term marketable debt securities		364			609
Goodwill		1,700			3,215
Other acquisition-related intangible assets, net		413			565
Other non-current assets, net		454			506
	$	11,684		$	14,340
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	569		$	—
Accounts payable		1,290			1,387
Accrued payroll-related liabilities		615			734
Accrued liabilities and other		1,204			1,105
Deferred revenues		2,070			2,236
Warranty reserve		184			206
Total current liabilities		5,932			5,668
Long-term debt		694			1,265
Long-term deferred revenues		521			683
Other non-current obligations		1,014			1,136
Stockholders’ equity:
Preferred stock		—			—
Common stock and additional paid-in-capital		7,492			7,391
Treasury stock, at cost		(2,699	)		(2,726	)
Retained earnings (accumulated deficit)		(1,602	)		430
Accumulated other comprehensive income		332			493
Total stockholders’ equity		3,523			5,588
	$	11,684		$	14,340

(1) Derived from audited financial statements.

SUN MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)

	Six Months Ended
	December 28, 2008			December 30, 2007
Cash flows from operating activities:
Net income (loss)	$	(1,886	)	$	349
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		214			241
Amortization of acquisition-related intangible assets		152			148
Stock-based compensation expense		101			100
Impairment of goodwill		1,445			—
(Gain) loss on investments and other, net		17			(22	)
Deferred taxes		—			8
Changes in operating assets and liabilities:
Accounts receivable, net		443			187
Inventories		87			(104	)
Prepaid and other assets, net		161			(30	)
Accounts payable		(99	)		(110	)
Other liabilities		(431	)		143
Net cash provided by operating activities		204			910
Cash flows from investing activities:
Increase in restricted cash		(3	)		(19	)
Purchases of marketable debt securities		(888	)		(1,030	)
Proceeds from sales of marketable debt securities		221			509
Proceeds from maturities of marketable debt securities		276			379
Proceeds from sales of equity investments, net		7			27
Purchases of property, plant and equipment, net		(285	)		(235	)
Payment for acquisitions, net of cash acquired		—			(41	)
Net cash used in investing activities		(672	)		(410	)
Cash flows from financing activities:
Purchase of common stock under stock repurchase plans		(130	)		(2,000	)
Proceeds from issuance of options and ESPP purchases, net		20			102
Principal payments on borrowings and other obligations		(9	)		(8	)
Net cash used in financing activities		(119	)		(1,906	)
Effect of changes in exchange rates on cash and cash equivalents		(55	)		—
Net decrease in cash and cash equivalents		(642	)		(1,406	)
Cash and cash equivalents, beginning of period		2,272			3,620
Cash and cash equivalents, end of period	$	1,630		$	2,214

SUN MICROSYSTEMS, INC.

CALCULATION OF NON-GAAP NET INCOME (LOSS)

(unaudited)

(in millions, except per share amounts)

	Three Months Ended
	September 28, 2008			December 28, 2008			December 30, 2007
Calculation of non-GAAP net income (loss):
GAAP net income (loss)	$	(1,677	)	$	(209	)	$	260
Purchased in-process research and development		—			—			1
Amortization of acquisition related intangibles		80			72			74
Stock-based compensation		49			52			52
Restructuring and related impairment of long-lived assets		63			222			32
Impairment of goodwill		1,445			—			—
(Gain) loss on equity investments, net		(8	)		3			—
Tax effect of non-GAAP adjustments		(17	)		(26	)		(10	)
Non-GAAP net income (loss)	$	(65	)	$	114		$	409
Diluted non-GAAP net income per share (loss)	$	(0.09	)	$	0.15		$	0.50
Shares used in the calculation of non-GAAP net income (loss) per common share – diluted		749			746			826

SUN MICROSYSTEMS, INC.

OPERATIONS ANALYSIS – CONSOLIDATED (UNAUDITED)

STATEMENTS OF OPERATIONS

	FY 2009						FY 2008										FY 2007
(in millions except per share amounts)	Q1		Q2		FY09		Q1		Q2		Q3		Q4		FY08		Q2		Q3		Q4		FY07
NET REVENUES
Products	1,764		1,939		3,703		1,980		2,249		2,003		2,386		8,618		2,260		2,060		2,492		8,771
Services	1,226		1,281		2,507		1,239		1,366		1,263		1,394		5,262		1,306		1,223		1,343		5,102
TOTAL	2,990		3,220		6,210		3,219		3,615		3,266		3,780		13,880		3,566		3,283		3,835		13,873
Growth vs. prior year (%)	-7.1	%	-10.9	%	-9.1	%	0.9	%	1.4	%	-0.5	%	-1.4	%	0.1	%	6.9	%	3.3	%	0.2	%	6.2	%
Growth vs. prior quarter (%)	-20.9	%	7.7	%			-16.1	%	12.3	%	-9.7	%	15.7	%			11.8	%	-7.9	%	16.8	%
COST OF SALES
Products	1,143		1,180		2,323		1,029		1,161		1,106		1,372		4,668		1,228		1,148		1,312		4,811
Services	646		690		1,336		629		701		692		735		2,757		734		674		711		2,797
TOTAL	1,789		1,870		3,659		1,658		1,862		1,798		2,107		7,425		1,962		1,822		2,023		7,608
% of revenue	59.8	%	58.1	%	58.9	%	51.5	%	51.5	%	55.1	%	55.7	%	53.5	%	55.0	%	55.5	%	52.8	%	54.8	%
GROSS MARGIN
Products	621		759		1,380		951		1,088		897		1,014		3,950		1,032		912		1,180		3,960
% of product revenue	35.2	%	39.1	%	37.3	%	48.0	%	48.4	%	44.8	%	42.5	%	45.8	%	45.7	%	44.3	%	47.4	%	45.1	%
Services gross margin	580		591		1,171		610		665		571		659		2,505		572		549		632		2,305
% of service revenue	47.3	%	46.1	%	46.7	%	49.2	%	48.7	%	45.2	%	47.3	%	47.6	%	43.8	%	44.9	%	47.1	%	45.2	%
TOTAL GROSS MARGIN	1,201		1,350		2,551		1,561		1,753		1,468		1,673		6,455		1,604		1,461		1,812		6,265
% of revenue	40.2	%	41.9	%	41.1	%	48.5	%	48.5	%	44.9	%	44.3	%	46.5	%	45.0	%	44.5	%	47.2	%	45.2	%
R&D	423		411		834		446		463		457		468		1,834		507		514		514		2,008
% of revenue	14.1	%	12.8	%	13.4	%	13.9	%	12.8	%	14.0	%	12.4	%	13.2	%	14.2	%	15.7	%	13.4	%	14.5	%
PURCHASED IN PROCESS R&D	—		—		—		—		1		24		6		31		—		—		—		—
% of revenue	0.0	%	0.0	%	0.0	%	0.0	%	0.0	%	0.7	%	0.2	%	0.2	%	0.0	%	0.0	%	0.0	%	0.0	%
SG&A	920		916		1,836		939		995		989		1,032		3,955		978		957		958		3,851
% of revenue	30.8	%	28.4	%	29.6	%	29.2	%	27.5	%	30.3	%	27.3	%	28.5	%	27.4	%	29.2	%	25.0	%	27.8	%
RESTRUCTURING CHARGES	63		222		285		113		32		14		104		263		26		35		15		97
% of revenue	2.1	%	6.9	%	4.6	%	3.5	%	0.9	%	0.4	%	2.8	%	1.9	%	0.7	%	1.1	%	0.4	%	0.7	%
IMPAIRMENT OF GOODWILL	1,445		—		1,445		—		—		—		—		—		—		—		—		—
% of revenue	48.3	%	0.0	%	23.3	%	0.0	%	0.0	%	0.0	%	0.0	%	0.0	%	0.0	%	0.0	%	0.0	%	0.0	%
TOTAL OPERATING EXPENSES	2,851		1,549		4,400		1,498		1,491		1,484		1,610		6,083		1,511		1,506		1,487		5,956
% of revenue	95.4	%	48.1	%	70.9	%	46.5	%	41.2	%	45.4	%	42.6	%	43.8	%	42.4	%	45.9	%	38.8	%	42.9	%
OPERATING INCOME (LOSS)	(1,650	)	(199	)	(1,849	)	63		262		(16	)	63		372		93		(45	)	325		309
Operating margin	-55.2	%	-6.2	%	-29.8	%	2.0	%	7.2	%	-0.5	%	1.7	%	2.7	%	2.6	%	-1.4	%	8.5	%	2.2	%
Interest and other income, net	(11	)	10		(1	)	58		53		34		16		161		63		50		59		214
Gain (loss) on equity investments, net	8		(3	)	5		22		—		—		10		32		—		5		1		6
Settlement income	—		—		—		—		—		—		45		45		—		54		—		54
PRETAX INCOME (LOSS)	(1,653	)	(192	)	(1,845	)	143		315		18		134		610		156		64		385		583
Pretax income (loss) margin	-55.3	%	-6.0	%	-29.7	%	4.4	%	8.7	%	0.6	%	3.5	%	4.4	%	4.4	%	1.9	%	10.0	%	4.2	%
INCOME TAX PROVISION (BENEFIT)	24		17		41		54		55		52		46		207		23		(3	)	56		110
NET INCOME (LOSS) (Reported)	(1,677	)	(209	)	(1,886	)	89		260		(34	)	88		403		133		67		329		473
Growth vs. prior year (%)	-1984.3	%	-180.4	%	-640.4	%	258.9	%	95.5	%	-150.7	%	-73.3	%	-14.8	%	159.6	%	130.9	%	209.3	%	154.7	%
Growth vs. prior quarter (%)	-2005.7	%	87.5	%			-72.9	%	192.1	%	-113.1	%	358.8	%			337.5	%	-49.6	%	391.0	%
Net income (loss) margin	-56.1	%	-6.5	%	-30.4	%	2.8	%	7.2	%	-1.0	%	2.3	%	2.9	%	3.7	%	2.0	%	8.6	%	3.4	%
EPS (Diluted) (Reported)(1)	(2.24	)	(0.28	)	(2.53	)	0.10		0.31		(0.04	)	0.11		0.49		0.15		0.07		0.36		0.52
Growth vs. prior year (%)	-2340.0	%	-190.3	%	-717.1	%	266.7	%	106.7	%	-157.1	%	-69.4	%	-5.8	%	157.7	%	128.0	%	202.9	%	151.5	%
Growth vs. prior quarter (%)	-2136.4	%	87.5	%			-72.2	%	210.0	%	-112.9	%	375.0	%			350.0	%	-53.3	%	414.3	%
SHARES (CSE)(Basic)(1)	749		743		746		866		806		785		772		809		881		887		889		883
SHARES (CSE)(Diluted)(1)	749		743		746		884		826		785		776		822		907		915		908		902
OUTSTANDING SHARES(1)	738		745		745		824		792		782		751		751		885		889		884		884

(1) Basic, diluted and outstanding shares have been retroactively restated to reflect the one-for-four reverse stock split effective November 12, 2007. Accordingly, basic and diluted EPS has also been retroactively restated to reflect the reverse stock split.

	FY 2009						FY 2008										FY 2007
(in millions)	Q1		Q2		FY09		Q1		Q2		Q3		Q4		FY08		Q2		Q3		Q4		FY07
REVENUE BY GEOGRAPHY(1) (2)
NORTH AMERICA REGION ($M)	1,213		1,258		2,471		1,386		1,407		1,253		1,551		5,597		1,500		1,352		1,676		5,964
Growth vs. prior year (%)	-12.5	%	-10.6	%	-11.5	%	-3.5	%	-6.2	%	-7.3	%	-7.5	%	-6.2	%	1.7	%	-6.4	%	-1.7	%	2.0	%
Growth vs. prior quarter (%)	-21.8	%	3.7	%			-17.3	%	1.5	%	-10.9	%	23.8	%			4.5	%	-9.9	%	24.0	%
EUROPE REGION ($M)	954		1,067		2,021		1,042		1,223		1,114		1,252		4,631		1,179		1,079		1,201		4,449
Growth vs. prior year (%)	-8.4	%	-12.8	%	-10.8	%	5.3	%	3.7	%	3.2	%	4.2	%	4.1	%	11.9	%	13.8	%	4.7	%	11.6	%
Growth vs. prior quarter (%)	-23.8	%	11.8	%			-13.2	%	17.4	%	-8.9	%	12.4	%			19.1	%	-8.5	%	11.3	%
EMERGING MARKETS REGION ($M)	463		558		1,021		415		563		463		528		1,969		444		418		496		1730
Growth vs. prior year (%)	11.6	%	-0.9	%	4.4	%	11.6	%	26.8	%	10.8	%	6.5	%	13.8	%	10.7	%	12.7	%	2.7	%	11.5	%
Growth vs. prior quarter (%)	-12.3	%	20.5	%			-16.3	%	35.7	%	-17.8	%	14.0	%			19.4	%	-5.9	%	18.7	%
APAC REGION ($M)	360		337		697		376		422		436		449		1,683		443		434		462		1,730
Growth vs. prior year (%)	-4.3	%	-20.1	%	-12.7	%	-3.8	%	-4.7	%	0.5	%	-2.8	%	-2.7	%	8.8	%	5.1	%	-6.3	%	2.9	%
Growth vs. prior quarter (%)	-19.8	%	-6.4	%			-18.6	%	12.2	%	3.3	%	3.0	%			13.3	%	-2.0	%	6.5	%
% of Total Revenue
NORTH AMERICA REGION (%)	40.6	%	39.1	%	39.9	%	43.1	%	38.9	%	38.4	%	41.0	%	40.3	%	42.1	%	41.2	%	43.7	%	43.0	%
EUROPE REGION (%)	31.9	%	33.1	%	32.5	%	32.4	%	33.8	%	34.1	%	33.1	%	33.4	%	33.1	%	32.9	%	31.3	%	32.1	%
EMERGING MARKETS REGION (%)	15.5	%	17.3	%	16.4	%	12.9	%	15.6	%	14.2	%	14.0	%	14.2	%	12.5	%	12.7	%	12.9	%	12.5	%
APAC REGION (%)	12.0	%	10.5	%	11.2	%	11.6	%	11.7	%	13.3	%	11.9	%	12.1	%	12.3	%	13.2	%	12.1	%	12.4	%
PRODUCTS AND SERVICES REVENUE
COMPUTER SYSTEMS PRODUCTS ($M)	1,257		1,369		2,626		1,475		1,594		1,473		1,722		6,264		1,634		1,500		1,853		6,455
Growth vs. prior year (%)	-14.8	%	-14.1	%	-14.4	%	0.5	%	-2.4	%	-1.8	%	-7.1	%	-3.0	%	13.6	%	1.8	%	2.3	%	7.6	%
Growth vs. prior quarter (%)	-27.0	%	8.9	%			-20.4	%	8.1	%	-7.6	%	16.9	%			11.3	%	-8.2	%	23.5	%
STORAGE PRODUCTS ($M)	507		570		1,077		505		655		530		664		2,354		626		560		639		2,316
Growth vs. prior year (%)	0.4	%	-13.0	%	-7.2	%	2.9	%	4.6	%	-5.4	%	3.9	%	1.6	%	-6.6	%	-0.2	%	-10.4	%	-2.4	%
Growth vs. prior quarter (%)	-23.6	%	12.4	%			-21.0	%	29.7	%	-19.1	%	25.3	%			27.5	%	-10.5	%	14.1	%
SUPPORT SERVICES ($M)	963		946		1,909		979		1,041		961		1,042		4,023		1,001		950		1,024		3,962
Growth vs. prior year (%)	-1.6	%	-9.1	%	-5.5	%	-0.8	%	4.0	%	1.2	%	1.8	%	1.5	%	5.0	%	5.1	%	3.9	%	7.7	%
Growth vs. prior quarter (%)	-7.6	%	-1.8	%			-4.4	%	6.3	%	-7.7	%	8.4	%			1.4	%	-5.1	%	7.8	%
PROFESSIONAL SERVICES & EDUCATIONAL SERVICES ($M)	263		335		598		260		325		302		352		1,239		305		273		319		1,140
Growth vs. prior year (%)	1.2	%	3.1	%	2.2	%	7.0	%	6.6	%	10.6	%	10.3	%	8.7	%	10.5	%	14.7	%	0.3	%	11.9	%
Growth vs. prior quarter (%)	-25.3	%	27.4	%			-18.5	%	25.0	%	-7.1	%	16.6	%			25.5	%	-10.5	%	16.8	%
NET BOOKINGS ($M)) (4)	2,981		3,259		6,240		3,149		3,872		3,186		3,783		13,990		3,603		3,238		3,909		13,786
Growth vs. prior year (%)	-5.3	%	-15.8	%	-11.1	%	3.7	%	7.5	%	-1.6	%	-3.2	%	1.5	%	19.4	%	20.8	%	15.8	%	20.0	%
Growth vs. prior quarter (%)	-21.2	%	9.3	%			-19.4	%	23.0	%	-17.7	%	18.7	%			18.7	%	-10.1	%	20.7	%
BOOK TO BILL RATIO ) (4)	1.00		1.01				0.98		1.07		0.98		1.00				1.01		0.99		1.02
PRODUCT BACKLOG ($M) (3) (4)	1,149		1,187				980		1,235		1,154		1,157				1,021		975		1,051
SERVICES BACKLOG ($M) (4)	773		598				951		772		753		779				729		820		879
TOTAL BACKLOG ($M)	1,922		1,785				1,931		2,007		1,907		1,936				1,750		1,795		1,930
DEFERRED REVENUES
PRODUCTS DEFERRED REVENUES ($M) (4)	868		898				564		793		745		897				538		577		603
Growth vs. prior year (%)	53.9	%	13.2	%			16.0	%	47.4	%	29.1	%	48.8	%			7.6	%	14.9	%	0.2	%
Growth vs. prior quarter (%)	-3.2	%	3.5	%			-6.5	%	40.6	%	-6.1	%	20.4	%			10.7	%	7.2	%	4.5	%
SERVICES DEFERRED REVENUES ($M) (4)	1,899		1,693				1,977		1,896		1,861		2,022				1,630		1,881		2,103
Growth vs. prior year (%)	-3.9	%	-10.7	%			13.2	%	16.3	%	-1.1	%	-3.9	%			9.3	%	15.5	%	12.3	%
Growth vs. prior quarter (%)	-6.1	%	-10.8	%			-6.0	%	-4.1	%	-1.8	%	8.7	%			-6.6	%	15.4	%	11.8	%
TOTAL DEFERRED REVENUES ($M)	2,767		2,591				2,541		2,689		2,606		2,919				2,168		2,458		2,706
Growth vs. prior year (%)	8.9	%	-3.6	%			13.8	%	24.0	%	6.0	%	7.9	%			8.9	%	15.3	%	9.3	%
Growth vs. prior quarter (%)	-5.2	%	-6.4	%			-6.1	%	5.8	%	-3.1	%	12.0	%			-2.9	%	13.4	%	10.1	%

(1) Geographic revenue reported for Q2FY07 has been adjusted to reflect a correction in intercompany revenue to properly report country of origin.

(2) Effective Q1FY09, we began utilizing revised geographic groupings. Revenue figures have been adjusted to reflect the change in the compilation of the countries that make up each of our geographic regions.

(3) Our product backlog includes orders for which customer-requested delivery is scheduled within six months and orders that have been specified by the customers for which products have been shipped but revenue has been deferred.

(4) The bookings and products and services backlog and deferred revenue number presented in Q3 FY08, Q4 FY08 and Q1 FY09 have been adjusted to reflect a correction. Q4 FY07 services backlog has also been adjusted to reflect a correction.

BALANCE SHEETS(1) (2) (3)

	FY 2009						FY 2008										FY 2007
(in millions)	Q1		Q2				Q1		Q2		Q3		Q4				Q2		Q3		Q4
CASH & ST INVESTMENTS	2,631		2,644				3,819		3,433		3,027		2,701				3,456		4,114		4,582
ACCOUNTS RECEIVABLE, NET	2,448		2,574				2,203		2,789		2,405		3,019				2,331		2,458		2,964
RAW MATERIALS	153		115				130		152		159		154				126		106		125
WORK IN PROCESS	94		67				110		96		99		90				106		101		95
FINISHED GOODS	415		410				331		383		477		436				373		360		304
TOTAL INVENTORIES	662		592				571		631		735		680				605		567		524
OTHER CURRENT ASSETS	1,356		1,298				1,297		1,306		1,329		1,434				1,158		1,221		1,258
TOTAL CURRENT ASSETS	7,097		7,108				7,890		8,159		7,496		7,834				7,550		8,360		9,328
PP&E, NET	1,662		1,645				1,556		1,569		1,584		1,611				1,579		1,586		1,533
GOODWILL	1,700		1,700				2,466		2,496		3,288		3,215				2,571		2,571		2,514
LT MARKETABLE DEBT SECURITIES	490		364				1,374		1,244		774		609				1,381		1,372		1,360
OTHER NON-CURRENT ASSETS, NET	961		867				1,072		1,011		1,120		1,071				1,221		1,161		1,103
TOTAL ASSETS	11,910		11,684				14,358		14,479		14,262		14,340				14,302		15,050		15,838
CURRENT PORTION OF LT DEBT	565		569				—		—		—		—				—		—		—
ACCOUNTS PAYABLE	1,110		1,290				1,140		1,312		1,306		1,387				1,296		1,187		1,381
ACCRUED LIABILITIES & OTHER	1,957		2,003				1,943		2,074		2,056		2,045				2,092		1,979		2,023
DEFERRED REVENUES	2,226		2,070				1,911		2,049		1,979		2,236				1,601		1,869		2,047
TOTAL CURRENT LIABILITIES	5,858		5,932				4,994		5,435		5,341		5,668				4,989		5,035		5,451
LT DEBT	694		694				1,270		1,273		1,275		1,265				579		1,270		1,264
LT DEFERRED REVENUES	541		521				630		640		627		683				567		589		659
OTHER NON-CURRENT OBLIGATIONS	1,055		1,014				1,271		1,259		1,229		1,136				1,396		1,264		1,285
STOCKHOLDERS’ EQUITY	3,762		3,523				6,193		5,872		5,790		5,588				6,771		6,892		7,179
TOTAL LIABILITIES & SE	11,910		11,684				14,358		14,479		14,262		14,340				14,302		15,050		15,838
CASH FLOW(1) (4)
	Q1		Q2		FY09		Q1		Q2		Q3		Q4		FY08		Q2		Q3		Q4		FY07
OPERATING ACTIVITIES	168		36		204		574		336		329		90		1,329		129		142		564		958
INVESTING ACTIVITIES	(258	)	(414	)	(672	)	(211	)	(199	)	113		231		(66	)	(1,013	)	(110	)	(97	)	(1,077	)
FINANCING ACTIVITIES	(132	)	13		(119	)	(1,231	)	(675	)	(293	)	(412	)	(2,611	)	135		647		(139	)	170
FX ON CASH	(20	)	(35	)	(55	)	—		—		—		—		—		—		—		—		—
KEY METRICS
	Q1		Q2				Q1		Q2		Q3		Q4				Q2		Q3		Q4
DAYS SALES OUTSTANDING (DSO)	74		72				62		69		66		72				59		67		70
DAYS OF SUPPLY ON HAND (DOS)	33		28				31		30		37		29				28		28		23
DAYS PAYABLES OUTSTANDING (DPO)	(56	)	(62	)			(62	)	(63	)	(65	)	(59	)			(59	)	(59	)	(61	)
CASH CONVERSION CYCLE (CCC)	51		38				31		36		38		42				28		36		32
L-T DEBT/EQUITY (%)	33.5	%	35.9	%			20.5	%	21.7	%	22.0	%	22.6	%			8.6	%	18.4	%	17.6	%
INVENTORY TURNS-PRODUCT ONLY (hist.)	7.8		7.9				8.2		7.5		7.1		7.8				8.6		8.7		9.0
ROE (12 mo. avg.)(%)	-25.9	%	-39.3	%			9.1	%	11.4	%	10.3	%	6.9	%			-6.8	%	-2.4	%	6.9	%
ROA (12 mo. avg.)(%)	-9.9	%	-14.0	%			4.2	%	5.0	%	4.4	%	2.8	%			-3.1	%	-1.1	%	3.2	%
ROIC (12 mo. avg.)(%)	-38.3	%	-52.0	%			8.1	%	11.8	%	10.7	%	4.0	%			-16.9	%	-11.6	%	5.2	%
DEPREC. & AMORT. ($M)	194		172				193		196		189		208				214		209		203
CAPITAL INVESTMENTS, NET ($M)	165		120				127		108		62		144				81		152		(36	)
NUMBER OF EMPLOYEES	33,423		33,556				33,904		33,350		34,440		34,909				34,667		34,494		34,219
REVENUE PER EMPLOYEE (12 mo. Avg.) ($K)	401		389				405		410		410		406				374		387		397

(1) Certain numbers presented in the Q2-Q3 fiscal 2007 balance sheets and statements of cash flow have been reclassified from other non-current assets to other current assets and investing activities to operating activities, respectively, to reflect a change in associated classification.

(2) Certain numbers presented in the fiscal 2007 balance sheets have been reclassified from accounts payable to accrued liabilities and other.

(3) Certain numbers presented in the fiscal 2007 and first quarter of fiscal 2008 balance sheets have been reclassified from deferred revenues to accrued liabilities and other.

(4) Cash flow from operating activities for Q1 and Q2 fiscal 2009 now includes the impact of foreign exchange movements on cash.

SUN MICROSYSTEMS, INC.

OPERATIONS ANALYSIS – CONSOLIDATED (UNAUDITED)

CALCULATION OF NON-GAAP NET INCOME (LOSS)

	FY 2009						FY 2008										FY 2007
(in millions except per share amounts)	Q1		Q2		FY09		Q1		Q2		Q3		Q4		FY08		Q2		Q3		Q4		FY07
GAAP net income (loss)	(1,677	)	(209	)	(1,886	)	89		260		(34	)	88		403		133		67		329		473
Non-GAAP adjustments:
Purchased in-process research and development	—		—		—		—		1		24		6		31		—		—		—		—
Amortization of acquisition related intangibles	80		72		152		74		74		76		86		310		80		78		74		313
Stock-based compensation	49		52		101		48		52		57		57		214		58		50		48		214
Restructuring and related impairment of long-lived assets	63		222		285		113		32		14		104		263		26		35		15		97
Impairment of goodwill	1,445		—		1,445		—		—		—		—		—		—		—		—		—
(Gain) loss on equity investments, net	(8	)	3		(5	)	(22	)	—		—		(10	)	(32	)	—		(5	)	(1	)	(6	)
Settlement income	—		—		—		—		—		—		(45	)	(45	)	—		(54	)	—		(54	)
Tax effect of non-GAAP adjustments	(17	)	(26	)	(43	)	(17	)	(10	)	(5	)	(11	)	(43	)	(7	)	(10	)	(7	)	(34	)
Non-GAAP net income (loss)	(65	)	114		49		285		409		132		275		1,101		290		161		458		1,003
Diluted non-GAAP net income (loss) per share	-0.09		0.15		0.07		0.32		0.50		0.17		0.35		1.34		0.32		0.18		0.50		1.11
Growth vs. prior year (%)	-128.1	%	-70.0	%	-91.5	%	190.9	%	56.3	%	-5.6	%	-30.0	%	20.7	%	500.0	%	357.1	%	455.6	%	-3800.0	%
Growth vs. prior quarter (%)	-125.7	%	266.7	%			-36.0	%	56.3	%	-66.0	%	105.9	%			190.9	%	-43.8	%	177.8	%

This operations analysis and related conference call contain non-GAAP financial measures. Sun utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing its overall business performance, for making operating decisions and for forecasting and planning future periods. The non-GAAP financial measures Sun uses include non-GAAP net income and diluted non-GAAP net income per share. Non-GAAP net income is defined as net income excluding purchased in-process research and development, amortization of acquisition related intangibles, stock-based compensation, restructuring and related impairment of long-lived assets, impairment of goodwill, gain or loss on equity investments, net, settlement income and the tax effect of these non-GAAP adjustments. These measures are used by some investors when assessing the performance of Sun. Sun believes the assessment of its operations excluding these items is relevant to the assessment of internal operations and comparisons to industry performance.

Reasons for Presenting Non-GAAP Measures. Sun believes these non-GAAP measures help illustrate Sun’s baseline performance before gains, losses or charges that are considered by Sun to be outside of on-going operating results. Accordingly, Sun uses these non-GAAP measures to gain a better understanding of Sun’s comparative operating performance from period-to-period and as a basis for planning and forecasting future periods. Sun believes these non-GAAP measures, when read in conjunction with Sun’s GAAP financials, provide useful information to investors by offering:

• the ability to make more meaningful period-to-period comparisons of Sun’s on-going operating results;

• the ability to better identify trends in Sun’s underlying business and perform related trend analysis;

• a better understanding of how management plans and measures Sun’s underlying business; and

• an easier way to compare Sun’s most recent results of operations against investor and analyst financial models.

Items Excluded From Non-GAAP Measures. As described above, the calculation of non-GAAP net income excludes items in the following categories:

Purchased In-Process Research and Development and Amortization of Acquisition Related Intangibles. Sun excludes purchased in-process research and development and amortization of intangible assets resulting from acquisitions to allow more accurate comparisons of its financial results to its historical operations, forward-looking guidance and the financial results of peer companies. In recent years, Sun has completed the acquisitions of MySQL and StorageTek and the acquisition of other assets and technologies, which resulted in operating expenses that would not otherwise have been incurred. Sun believes that providing a non-GAAP financial measure that excludes purchased in-process research and development and the amortization of acquisition related intangible assets provides the users of its financial statements an enhanced understanding of historic and future financial results and facilitates comparisons to peer companies. Additionally, with respect to the amortization of acquisition related intangible assets, had Sun internally developed these intangible assets, the amortization of such intangible assets would have been expensed historically, and Sun believes the assessment of its operations excluding these costs is relevant to the assessment of internal operations and comparisons to industry performance. Amortization of acquisition related intangibles will recur in future periods. Although purchased in-process research and development expenses are not recurring with respect to past acquisitions, Sun will incur these expenses in connection with any future acquisitions.

Stock-Based Compensation. Stock-based compensation is a key incentive offered to Sun’s employees, and Sun believes such compensation contributed to the revenues earned during the periods presented and also believes it will contribute to the generation of future period revenues. Nevertheless, Sun believes that the exclusion of non-cash stock-based compensation allows management and investors to compare Sun’s recurring core business operating results over multiple periods. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use to account for stock-based compensation under FAS 123R, Sun’s management believes that providing a non-GAAP financial measure that excludes stock-based compensation allows investors to make meaningful comparisons between Sun’s recurring core business operating results and those of other companies, as well as providing Sun’s management with an important tool for financial and operational decision making and for evaluating Sun’s own recurring core business operating results over different periods of time. In addition, Sun prepares and maintains its budgets and forecasts for future periods excluding stock-based compensation. Stock-based compensation expenses will recur in future periods.

Restructuring and Related Impairment of Long-Lived Assets, Impairment of Goodwill, Gain or Loss on Equity Investments, Net, Settlement Income and Tax Effect of Non-GAAP Adjustments. Sun excludes these items because it believes that they are not directly related to the underlying performance of Sun’s core business operations. Other than impairment of goodwill, each of these items are expected to recur in future periods.

Limitations. Each of the non-GAAP financial measures described above, and used in this operations analysis and the related conference call, should not be considered in isolation from, or as a substitute for, a measure of financial performance prepared in accordance with GAAP. Further, investors are cautioned that there are inherent limitations associated with the use of each of these non-GAAP financial measures as an analytical tool. In particular, these non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in Sun’s financial results for the foreseeable future. In addition, other companies, including other companies in Sun’s industry, may calculate non-GAAP financial measures differently than Sun does, limiting their usefulness as a comparative tool. Sun compensates for these limitations by providing specific information in the reconciliation included in this operations analysis regarding the GAAP amounts excluded from the non-GAAP financial measures. In addition, as noted above, Sun evaluates the non-GAAP financial measures together with the most directly comparable GAAP financial information.