Private equity giant KKR & Co. (NYSE: KFN) posted a $1.2 billion loss last year -- compared to pretax net income of $815 million the year before. This is KKR's first loss in at least five years.

Bloomberg pins the blame on a drop-off in leveraged buyout transactions. A $1.4 trillion market in 2006 and 2007, only $212 billion was spent on takeovers last year, which was bound to put a dent in KKR's top and bottom lines.

MOST NOTEWORTHY: StoneMor Partners, Suntech Power and Tesoro were today's noteworthy initiations:

• Morgan Keegan initiated StoneMor Partners (NASDAQ: STON) with a Market Perform rating. The firm has a low level of confidence in STON's financial projections given its vulnerability to changes in state and local regulations, and financial reporting complexities.
  
• Jesup & Lamont initiated Suntech Power (NYSE: STP) with a Buy based on the company's leading position in solar PV, industry growth and polysilicon supply agreements in place.
  
• Tesoro (NYSE: TSO) was assumed with an Underweight rating at JP Morgan. The firm expects the West Coast margins to remain weak given the decline in the gasoline demand and capacity increases of the majors.

OTHER INITIATIONS:

• RBC Capital initiated Agrium (NYSE: AGU) with an Outperform rating and $115 target.
  
• Merrill initiated Kohlberg Capital (NASDAQ: KCAP) with a Neutral rating.
  
• Caris started Newell Rubbermaid (NYSE: NWL) with an Average rating and $24 target.

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.