Sun Microsystems barely achieved profitability for a second straight quarter, ending a financial year that saw the company's revenue drop 8.5% from last year to $11.4bn (£7.1bn).
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"We certainly had our share of challenges throughout the year, but we finished in a strong financial position," said Sun's chief financial officer, Steve McGowan.
Sun reported revenue of just under $3bn (£1.9bn) for the fourth quarter ending 30 June. Sun's net income was $12m (£7.5m).
Revenue for the quarter was down 13% from last year's fourth quarter, when Sun booked $3.4bn in revenue.
Sun's revenue for its 2002 financial year was $12.5bn (£7.8bn).
The company's services and storage businesses performed well, according to Lehman Brothers Holdings financial analyst Dan Niles, but Sun's server business continued to perform below expectations.
"Sun's in a very tough spot. They're stuck between Intel taking share on the midrange and low end, and IBM on the high end," Niles said.
The company's server business has had difficulties, in particular at the midrange of the market, where servers cost between $100,000 and $1m, said IDC analyst Jean Bozman.
Sun has been struggling, not because it is failing to sell servers, she said, but because prices have been dropping.
"What you see is average sales prices going down," she said. "They're still selling a lot of product."
Sun's server numbers were further hurt by delays in shipping the company's SunFire V210 and V240 servers, which had been expected to ship in the fourth quarter, McGowan said.
He estimated the delays cost Sun about $50m (£31m) in business.
The company's server business earned $1bn (£624m) in revenue for the quarter, Sun said, up from just under $920m (£574m) in the same quarter of 2002.
Robert McMillian writes for IDG News Service