Sun Microsystems is back in black with major upside earnings surprise

Sun Microsystems, Inc. (NASDAQ:SUNW), proved the naysayers wrong this evening, posting quarterly results that far surpassed Wall Street's muted expectations. The computer server and software company, which was all but left for dead by investors after the dot-com collapse, is now solidly profitable in its second fiscal quarter.

Wall Street expected Sun to break even, but the company delivered profits of $126 million, or 3 cents a share. That's up from a loss of $223 million, or 7 cents a share a year ago.

Revenues hit $3.57 billion, up from $3.32 billion a year ago. That number was only slightly better than Wall Street was expecting ($3.52 billion). No doubt some analysts will still be wondering whether Sun can really grow again, or just acquire and slash its way to profitability.

Still, optimism by BloggingStocks readers was clearly warranted. In our poll, 72% of 218 readers who voted, predicted Sun would beat Wall Street's expectations.

Now the stock is surging after hours. The shares closed at $5.66 today, a drop of 9 cents. But as of 4:45, buyers were flocking to the stock at a price of $6.11.

Also likely to encourage more buying: Sun announced that private equity firm Kohlberg Kravis Roberts & Co. is taking a stake in the firm. No, they aren't buying the stock. They are buying Sun's senior convertible bonds. Still, that's a vote of confidence nonetheless.

Sun bulls, this is your time to take a bow.

Also check out some other earnings reports that we're following, and let us know your thoughts on earnings expectations.