..Financials Headquarters

SUN 2003E 2002 2001 4150 Network Circle Revenue $ 11,872 $ 12,496 $ 18,250 Santa Clara, CA 95054 650-960-1300 Cost of Goods Sold $ 8,228 $ 5,056 $ 10,302 http://www.sun.com/ Gross Profit Margin 41.8% 39.3% 44% SG&A Expense $ 3,362 $ 3,868 $ 6,560 Management Operating Income $ 39 $ 784 $ 1,388 Total Net Income $ 106 $ -229 $ 927 President & CEO - Scott McNealy Chief Scientist & CEO - CIO - H. William Howard Revenue by Product Line Executive VP - Crawford Beveridge Senior VP & Special Counsel - Michael Morris CEO SW Senior VP, Workplace Resources - William T. Agnello Microelec. Executive VP & CTO - Greg Papadopoulos 5% $200 M Executive VP, Software Group - Jonathan Schwartz Add-Ons $645 M Executive VP, Sun Services - Patricia Sueltz Storage $2,165 M Executive VP, Marketing & Strategy - Mark Tolliver HW Wkstn. $855 M Services 80% CEO 15% Servers $5,416 M

CIO

Business is a leading maker of UNIX-based, number-crunching workstation computers, storage devices, and servers for powering corporate computer networks and Web sites. The company is the largest to make computers that use its own chips, SPARC,

and operating systems, Solaris. Sun's most talked-about product may be , a programming language intended to create software that can run unchanged on any kind of computer. Its Jini technology enab les electronic devices to communicate with each other and over networks. Sun sells to customers in the telecommunications, financial, healthcare, retail, government, manufacturing, and education markets. Since the company's inception in 1982, a singular vision -- The Network Is The Computer-- has propelled Sun

Microsystems to its position as a leading provider of industrial-strength hardware, software, and services that power the Net and allow enterprises worldwide to take their businesses to the nth. Industry & Competition (for subscribed clients only) WW Market Forecasts – Enterprise Servers, Storage, Software, Appliances, Services Sun Market Shares – Servers (HE,MR,WkStns), Storage, Software (Java,Sunsoft), Services Sun Competitive Positioning by Products – Servers, Storage, Software, Enterprise & Web Services Sun Market Strategy - Enterprise, Midrange, SMB, Service Providers Sun Financials by Business Segments, Product Lines, Geography, Sales & Earnings Model Product Summary

Desktop T Information Appliances T Storage T

UltraSparc Wkstn. SunRay Appliance 1, 100, 150 Sun StorEdge 100, 1000 Ultra 5, 10, 60, 80

Peripherals T Software T Servers T Network Cards Sun Cluster Sun Netra Chips Sun Management Sun Cobalt Boards Sun HighGround SunFire Printers Java SunEnterprise Monitors many more...

titive Profiles © 1997-2002 IMEX Research - (408)268-0800 - [email protected] e Financials

FINANCIALS 1999 2000 2001 2002 2003

Revenue $ 11,726 $ 15,721 $ 18,250 $ 12,496 $ 11,872 Cost of Goods Sold $ 5,648 $ 7,549 $ 7,961 $ 5,506 $ 4,619

Gross Profit $ 6,078 $ 8,172 $ 8,209 $ 4,916 $ 5,413 Gross Profit Margin 52% 52% 44.9% 39.3% 45.6%

SG&A Expense $ 4,436 $ 5,779 $ 4,445 $ 3,812 $ 3,362

Operating Income $ 1,642 $ 2,393 $ 1,311 $ -1,248 $ 39 Operating Margin 14% 15% 7% -10% 0.3%

Net Income $ 1,031 $ 1,854 $ 927 $ -587 $ 106 Net Profit Margin 9% 12% 5% -4% 0.8%

Sun Microsystem - Financials

20,000 Sun Revenue by Product Line

HE-WS Software 4% LE-WS 15,000 21% <$15K Revenues 3%

10,000 3rd Party Elex

2% $M Gross Profit 5,000 Storage 18% Servers

46% 0 Add-ons 1999 2000Oper 2001 Income 2002 2003 3%

Net Income -5,000

HPQ

IBM

DELL

SUNW

Revenues by Product line

2001 2002 2003 2004E High-end Workstations>$15K$ 815 $ 565 $ 515 $ 480 Low-end Workstations<$15K 565 345 330 320 Telecom Servers (Netra) 785 350 245 260 Hardware Other Servers (Cobalt, etc.) 600 280 250 400 Storage 3,285 2,347 2,235 2,475 Third Part Electronics 355 200 200 200 JavaS oft Divis ion 165 153 153 170 Software SunSoft Division 841 870 870 818 SunService Division 3,234 2,301 2,301 4,225

Systems and Technology

Netra 20 Netra 120 Special Servers

(Netra Series) Netra 1280 15K Netra 1400/1405 Sun Fire 12K Netra CT800 Sun Fire 6800 Netra CT400 Sun Fire 4800

Netra CT810 Sun Fire V1280

Netra CT410 SunFire V880

SunFire V480

Sun Fire 280R

SunFire Blades

Sun LX50

SunFire V100 Standard DataCenter Servers MidRange

Traffic Manager: -Dynamic load balancing across HBA’s Storage -Automatic path failover SRM: -Predictive trending Entry-Level -Scriptable agents Utilization Suite: -Policy based auto ESM: Performance Suite: archiving -Industry’s first CIM -True SAN file sharing -“Instant” recoverability compliant SAN manager -Massive scale and -End to End diagnostics performance Market Shares

W.W. Server Market Share W.W. Disk Storage Market

CPQ CPQ IBM 18% 17% 22% IBM 11%

EMC 18%

SUN SUN 10% 17%

Other HP 23% 9% HP DELL Other 15% 6% 34%

W. W. Storage SW Market W.W. Services Market

Other IBM EOS HP 37% 9% 5%Fujitsu 2% 3% Anderson CPQ 3% 3% CSC Sun 3% IBM 1% 16% Sun

1%

EMC Veritas 25% Other 16% 76%

Sun Products UltraSparc Workstations Workstations Sun Blade 150 Sun Blade 2000 1, 100, 150 Appliance Information Appliances

High-End Data Center Systems Sun StorEdge 9970, 9980 Mid-Range Storage Arrays Sun StorEdge 3900 & 6000 Sun StorEdge T3 & A5200 Array Enterprise Workgroup Storage Arrays Sun StorEdge T3 (Workgroup) Sun StorEdge 3000 Family Sun StorEdge A1000/D1000 Sun StorEdge S1 & D2 Arrays Storage Netra st A1000/D1000 Desktop Storage Sun StorEdge Multipack Sun StorEdge Unipack NAS solutions Sun StorEdge N8200 Sun StorEdge N8400 Sun StorEdge N8600 Storage SW Sun Highground Servers Netra t 1120/1125 Netra t 1400/1405 Rack Optimized Servers and Netra t1 and Netra T1 AC200/DC200 Netra X1 Storage Storage Systems Netra st A1000/D1000 Netra st D130 Netra E1 Sun Cobalt[tm] Qube 3 Server Appliance Sun Cobalt[tm] RaQ XTR Server Appliance Server Appliances Sun Cobalt[tm] RaQ 4 Server Appliance Sun Cobalt[tm] CacheRaQ 4 Server Appliance

Workgroup U5S

Sun Enterprise U10S Sun Enterprise 220R

Sun Enterprise 250 Sun Fire 280R

Sun Enterprise 420R Sun Enterprise 450

Midrange Sun Fire 3800 Servers Sun Fire 4800

Sun Fire 4810 Sun Fire 6800

Sun Enterprise 3500 Sun Enterprise 4500

Sun Enterprise 5500 Sun Enterprise 6500

High-End Sun Fire 15K

Sun Enterprise 10000

OS Solaris 9

Development Forte Java

Forte C++ Forte Fortran/HPC

Software Forte C Network Connectivity

SunLink Server Performance

SunCluster Storage

Sun StorEdge DataShare

World Wide IT Market Forecast

$1,600,000

Services

Enterprise SW

Storage Workstations HW Servers $- PC

2000 2001 2002 2003 2004

WW Storage Market Rev 2002-06

$80.00

$70.00

Tape $60.00

$50.00 Direct Disk

$40.00 Networked Storage

$30.00 Software EU Rev $B $20.00 Services

$10.00

$-

2002 2003 2004 2005 2006

Ent. Resource Management Storage Software

Media and Library

Management, SRM

$10 (including SAN $8.7 Manager) $8 $7.3 $6.3 $1.8 Data $5.4 $1.5 Management $6 Backup/Recovery, $4.9 $4.9 $1.3 $4.8 HSM/Archive $3.7 $1.1 $4 $1.0 $0.9 $0.9 Storage $3.2

$ Billions $0.8 $2.7 Infrastructure $2.4 File systems, $2.1 $2 $1.8 $1.9 $1.8 $1.9 volume management, $2.6 $3.1 $3.6 $1.1 $1.9 $2.2 $2.1 $2.3 virtualization, $0 replication 1999 2000 2001 2002 2003 2004 2005 2006

WW Operating Systems Market - Client and Server Win 32 & 64 owns the biggest market share

25000

20000 Win 32 & 64 15000 $M 10000 Linux/OOS OS/400 Unix 5000 Single User Mainframe Embedded 0 2000 2001 2002 2003 2004 2005 2006 2007 Multi User

Server OS Shipments - New Licenses Linux and Win2003 Rise Steadily as WinNT, SOEs, and Mainframes die out

10000 9000 8000 7000 Linux (Paid) 6000 5000 4000 Win 2003 Units (000s) 3000 Win 2K 2000 Win NT SOE 1000 UNIX Total NetWare Mainframe 0 2000 2001 2002 2003 2004 2005 2006 WW Server Market Shares

Other HPQ 28% 31%

NEC 2% Sun 6% Dell IBM 19% 14%

WW Software Revenues by Vendor Computer Hew lett-Packard Associates 2% 4% Oracle Others 5% Othe r 59% 71% IBM 7%

Microsoft 11%

1% of Revenues : Novell, Hitachi, SAP AG, Fujitsu, Siebel, Compuw are, Sun, BMC, PeopleSoft, Adobe, Veritas, Unisys, Siemens, AOL SAS 100 90 80 70 PCI Bus 60 FC HBA

% 50 InfiniBand 40 IP Storage 30 20 10 0 1994 1996 1998 2000 2002 2004

Linux Market Growth

12

10

8

6

Millions 4

2

0 1999 2000 2001 2002 2003 2004 2005 2006

Software Partnerships

Integrated Apps.: Content Management: Afara Security & Payment: Bulldog Ariba Baltimore Interwoven ATG Entrust Broadvision Vignette ISS Clustra Virage Trintech Gridware Innosoft Interactive Media: E-marketplace: Intershop Macromedia Moai Technologies Interworld RealNetworks Trading Dynamics (Ariba) iPlanet (Sun-Netscape Alliance) Open Market Portal Builders: Profiling/Personalization: Oracle Autonomy Accrue Pirus Epicentric Andromedia (Macromedia) Star Division Lotus Engage Terraspring TIBCO.net net.Genesis Trans (Critical Path) NetPerceptions Catalogs & Configurators: Web/App Server: Selectica BEA (WebLogic) Customer Care: Iplanet Trilogy Graham Siebel Billing/IBP & P: Workflow/Collaboration: Vantive (Peoplesoft) Portal FileNet iPlanet Documentum Storage Management: Just-in-time Lotus VERITAS

Performance: Inktomi Resonate TimesTen