Sun Microsystems announced its first-quarter revenue of 2004 has dropped 8% to $2.5bn and reported a net loss of $286m (£171m).
The services division booked $900m (£739m) in sales for the quarter, the highest first-quarter earnings so far for the services group, according to Steve McGowan, Sun's chief financial officer and executive vice-president.
Single- and dual-processor servers represented the fastest growing part of Sun's server product line, said Scott McNealy, Sun's chief executive officer.
Sun's product revenue was $1.6bn (£958m) for the quarter, a decline of 13% from the same period a year ago.
The company was unable to ship a number of its servers, including the Sun Fire V210 and V240, for the first month of the quarter. "In July, most of our server product line was on stop ship," he said.
As a consequence of this stoppage, Sun shipped products representing 60% of its revenue in the last four weeks of the quarter.
Sun said it was looking to a number of areas for growth, including managed services and integration services.
Sun's chief executive officer also expressed high hopes for his company's recently announced Java Enterprise System and Java Desktop System software, saying that Sun's rivals had yet to respond to their per-employee licensing plans.
"I'd just like to sign up a small percentage of the worldwide employee base and this could become a very high return-rate opportunity for us," he said.
Robert McMillan writes for IDG News Service