Sun Microsystems exceeded analyst expectations by posting a $329m profit on revenues of $13.9bn over the past fiscal year that ended in June.

The period marks the first full year that Jonathan Schwartz acted as Sun's chief executive.

Schwartz replaced Sun co-founder Scott McNealy in April 2006, who currently acts as chairman of the board of directors.

McNealy set Sun on a course where it started to release all its software under an open source licence. Similar to Red Hat's business model, Sun sells support services for the software. But the firm also expects that its open source software will increase overall demand for its servers and thereby grow revenues.

Customers and analysts met the open source software with doubt because they feared that it would cannibalise Sun's revenues.

"[I] hope we can officially put to rest the question, 'how will you make money?'," Schwartz quipped in a blog posting in which he boasted about the earnings and the record 47 per cent gross marin in the fourth quarter of this year.