Sun Microsystems is a leading supplier of computer-related products, including servers, workstations, storage devices, and network switches. In 2009, Sun Microsystems was acquired by Oracle Corporation In the letter to stockholders as part of the 2001 annual report, President and CEO Scott G.McNealy offered the following remarks: Fiscal 2001 was clearly a mixed bag for Sun, the industry, and the economy as a whole. Still, we finished with revenue growth of 16 percent-and that's significant. We believe it's a good indication that Sun continued to pull away from the pack and gain market share. For that, we owe a debt of gratitude to our employees worldwide, who aggressively brought costs down even as they continued to bring exciting new products to market. The statement would not appear to be telling you enough. For example, McNealy says the year was a mixed bag with revenue growth of 16 percent. But what about earnings? You can delve further by examining the income statement in Exhibit 4. Also, for additional analysis of other factors, consolidated balance sheet(s) are presented in Exhibit 5. Exhibit 1 2001 Dollars 2000 Dollars 1999 1998 Dollars Dollars 5 9,865 11,804 Net revenues $ 18,550 S 15,726 R $ 7.543 55,675 54.645 1,626 1,273 1,034 $ 10,044 2011 4,547 4,069 3,188 2,836 200 1171 178 Costs and expenses: Cost of sales Research and earch and development Selling, general and administrative Goodwill amortization in In-process research and development Total costs and expenses Operating Income ome Gain (loss) on strategic investments Interest income, net Litigation settlement Income before taxes $ 16,942 $ 13,31215 10214 8 693 3 $1.608 $2,414 $1,532, $-94 $ 205 $ 1.876 $ 1705 86 $ 48 - - - $ 2,790 5 1,618 1.219.7 $ 969.12 S 699.6 S 4262 $ 1,004.9 $-55 Provision for income taxes Cumulative effect of change in accounting principle, net Net income Net income per common share- 1 5 $926. $ 0.27 1.820.88 $918.4 5.793.5 $0.54 $0.28 $0.25 Rate of change, 1998 to 1999: Rate of change, 1999 to 2000: Rate of change, 2000 to 2001: Part B Also in Exhibit 1, compute net incomeet revenue (sales) for each of the four years. Begin with 1998 1998 Profit Margin: 1999 Profit Margin: 2000 Profit Margin: 2001 Profit Margin: Part C Compute return on stockholders' equity for 2000 and 2001 using data from Exhibits 1 and 2 2000 Return on Stockholders' Equity 2001 Return on Stockholders' Equity Part D Analyze your results to Question 2 (Part B above) more completely by computing ratios 1, 2a, 2b, and 3b (these numbers correspond with the numbered ratios listing in Chapter 3 of our textbook) for 2000 and 2001. Actually, the answer to ratio 1 can be found as part of the answer to question 2 (Part 3), but it is helpful to look at it again. Ratio 2000 2001 2a 2b Part E The average stock prices for each of the four years shown in Exhibit 1 were as follows: 1998 1999 2000 2001 11%A 16% 2872 972 Compute the pricelearnings (P/E) ratio for each year. That is, take the stock price shown above and divide by net income per common stock-dilution from Exhibit 1. 1998 P/E Ratio: 1999 P/E Ratio: 2000 P/E Ratio: 2001 P/E Ratio Rate of change, 1998 to 1999: Rate of change, 1999 to 2000: Rate of change, 2000 to 2001: Part B Also in Exhibit 1, compute net incomeet revenue (sales) for each of the four years. Begin with 1998 1998 Profit Margin: 1999 Profit Margin: 2000 Profit Margin: 2001 Profit Margin: Part C Compute return on stockholders' equity for 2000 and 2001 using data from Exhibits 1 and 2 2000 Return on Stockholders' Equity: 2001 Return on Stockholders' Equity Part D Analyze your results to Question 2 (Part B above) more completely by computing ratios 1, 2a, 2b, and 3b (these numbers correspond with the numbered ratios listing in Chapter 3 of our textbook) for 2000 and 2001. Actually, the answer to ratio 1 can be found as part of the answer to question 2 (Part 3), but it is helpful to look at it again. Ratio 2000 2001 2a 2b Part E The average stock prices for each of the four years shown in Exhibit 1 were as follows: 1998 1999 2000 2001 11% 16% 2872 9% Compute the pricelearnings (P/E) ratio for each year. That is, take the stock price shown above and divide by net income per common stock-dilution from Exhibit 1. 1998 P/E Ratio: 1999 P/E Ratio: 2000 P/E Ratio: 2001 P/E Ratio Sun Microsystems is a leading supplier of computer-related products, including servers, workstations, storage devices, and network switches. In 2009, Sun Microsystems was acquired by Oracle Corporation In the letter to stockholders as part of the 2001 annual report, President and CEO Scott G.McNealy offered the following remarks: Fiscal 2001 was clearly a mixed bag for Sun, the industry, and the economy as a whole. Still, we finished with revenue growth of 16 percent-and that's significant. We believe it's a good indication that Sun continued to pull away from the pack and gain market share. For that, we owe a debt of gratitude to our employees worldwide, who aggressively brought costs down even as they continued to bring exciting new products to market. The statement would not appear to be telling you enough. For example, McNealy says the year was a mixed bag with revenue growth of 16 percent. But what about earnings? You can delve further by examining the income statement in Exhibit 4. Also, for additional analysis of other factors, consolidated balance sheet(s) are presented in Exhibit 5. Exhibit 1 2001 Dollars 2000 Dollars 1999 1998 Dollars Dollars 5 9,865 11,804 Net revenues $ 18,550 S 15,726 R $ 7.543 55,675 54.645 1,626 1,273 1,034 $ 10,044 2011 4,547 4,069 3,188 2,836 200 1171 178 Costs and expenses: Cost of sales Research and earch and development Selling, general and administrative Goodwill amortization in In-process research and development Total costs and expenses Operating Income ome Gain (loss) on strategic investments Interest income, net Litigation settlement Income before taxes $ 16,942 $ 13,31215 10214 8 693 3 $1.608 $2,414 $1,532, $-94 $ 205 $ 1.876 $ 1705 86 $ 48 - - - $ 2,790 5 1,618 1.219.7 $ 969.12 S 699.6 S 4262 $ 1,004.9 $-55 Provision for income taxes Cumulative effect of change in accounting principle, net Net income Net income per common share- 1 5 $926. $ 0.27 1.820.88 $918.4 5.793.5 $0.54 $0.28 $0.25 Rate of change, 1998 to 1999: Rate of change, 1999 to 2000: Rate of change, 2000 to 2001: Part B Also in Exhibit 1, compute net incomeet revenue (sales) for each of the four years. Begin with 1998 1998 Profit Margin: 1999 Profit Margin: 2000 Profit Margin: 2001 Profit Margin: Part C Compute return on stockholders' equity for 2000 and 2001 using data from Exhibits 1 and 2 2000 Return on Stockholders' Equity 2001 Return on Stockholders' Equity Part D Analyze your results to Question 2 (Part B above) more completely by computing ratios 1, 2a, 2b, and 3b (these numbers correspond with the numbered ratios listing in Chapter 3 of our textbook) for 2000 and 2001. Actually, the answer to ratio 1 can be found as part of the answer to question 2 (Part 3), but it is helpful to look at it again. Ratio 2000 2001 2a 2b Part E The average stock prices for each of the four years shown in Exhibit 1 were as follows: 1998 1999 2000 2001 11%A 16% 2872 972 Compute the pricelearnings (P/E) ratio for each year. That is, take the stock price shown above and divide by net income per common stock-dilution from Exhibit 1. 1998 P/E Ratio: 1999 P/E Ratio: 2000 P/E Ratio: 2001 P/E Ratio Rate of change, 1998 to 1999: Rate of change, 1999 to 2000: Rate of change, 2000 to 2001: Part B Also in Exhibit 1, compute net incomeet revenue (sales) for each of the four years. Begin with 1998 1998 Profit Margin: 1999 Profit Margin: 2000 Profit Margin: 2001 Profit Margin: Part C Compute return on stockholders' equity for 2000 and 2001 using data from Exhibits 1 and 2 2000 Return on Stockholders' Equity: 2001 Return on Stockholders' Equity Part D Analyze your results to Question 2 (Part B above) more completely by computing ratios 1, 2a, 2b, and 3b (these numbers correspond with the numbered ratios listing in Chapter 3 of our textbook) for 2000 and 2001. Actually, the answer to ratio 1 can be found as part of the answer to question 2 (Part 3), but it is helpful to look at it again. Ratio 2000 2001 2a 2b Part E The average stock prices for each of the four years shown in Exhibit 1 were as follows: 1998 1999 2000 2001 11% 16% 2872 9% Compute the pricelearnings (P/E) ratio for each year. That is, take the stock price shown above and divide by net income per common stock-dilution from Exhibit 1. 1998 P/E Ratio: 1999 P/E Ratio: 2000 P/E Ratio: 2001 P/E Ratio