Computer maker Sun Microsystems Inc. (SUNW) on Tuesday said quarterly net income fell from a year ago in which results were boosted by its legal settlement with Microsoft Corp. (MSFT), while revenue slid for a third consecutive quarter.

Sun Microsystems posted net income for its fourth fiscal quarter ended June 30 of $121 million, or 4 cents a share, down from $783 million, or 23 cents a share, a year ago. Excluding the year-ago settlement gain, Sun had a loss of 5 cents.

Analysts expected Sun to earn 1 cent a share, on average, within a range of a loss of 1 cent to a profit of 4 cents, on revenue of $2.98 billion, according to Reuters Estimates.

Last year Sun received a settlement from its long-standing legal battle with Microsoft. Sun sued Microsoft for antitrust issues.

Sun, which has been harder hit than rivals International Business Machines (IBM), Hewlett-Packard Co. (HPQ) and Dell Inc. (DELL), has been seeking to turn around and return to sustained profitability by bundling its servers, software, data storage and computer services and selling them on a subscription basis.

"Given the company is still in the midst of a transition and turnaround, I thought the numbers were good," said Brent Bracelin, an analyst at Pacific Crest Securities. "This is a company where I think expectations were very low and Sun did a little bit better than what people were thinking.

Sun said the latest quarter included a net tax benefit of $190 million. As is typical with Sun, it did not give a forecast for the current fiscal first quarter of 2006.

Revenue in the latest fourth quarter fell to $2.98 billion from $3.11 billion a year ago.

In extended trading on the Inet electronic brokerage system, the stock ticked higher to $3.98. Based on Monday's closing price, the stock has declined 29 percent so far this year, compared with a 7 percent decline in the American Stock Exchange Computer Hardware Index (search).