Slow growth in revenue leads to a drop in supplier's share price despite increase in profit

Sun Microsystems reported quarterly profits of $89m (£42.7m) compared with a loss of $56m (£27m) last year, but shares of the hardware manufacturer still fell as revenue grew less than expected.

First-quarter sales rose less than one per cent to $3.22bn. Sun shares, up 3.3 per cent this year, fell 2.5 per cent in trading.

Sun had been staging a recovery by selling servers powered by chips from Advanced Micro Devices (AMD) and has cut about 4,000 jobs in the past year.

The company had 13 per cent of the worldwide server market in the three months ended June 30, while IBM claimed 31 per cent and HP 28.2 per cent, according to analyst IDC.