The ratings on Santa Clara, Calif.-based Sun Microsystems Inc. reflect a good, but not leading, position (based on all operating systems) in the highly competitive global server market, a relatively narrow market base--particularly in comparison with major competitors--and inconsistent profitability. These factors are offset partially by moderate debt levels and strong liquidity. Although Sun has made consistent investment in new product development and has a significant base of relatively consistent service revenues, total revenue growth (excluding the impact of currency) remains a challenge. Revenues for the quarter ended Sept. 30, 2007, were approximately flat compared with the prior-year period, at $3.2 billion. The ability to achieve sustained, profitable revenue growth will, in part, depend on greater market penetration into Sun's
