Company Name: Sun Microsystems, Inc.
Public Availability Date: July 21, 2005

Document Sections:

INQUIRY LETTER
APPENDIX
STAFF REPLY LETTER

[INQUIRY LETTER]

July 1, 2005

Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549

Re: Shareholder Proposal Relating to Poison Pill Received May 24, 2005

Dear Sir or Madam:

This letter is submitted on behalf of Sun Microsystems, Inc. ("Sun" or the "Company") pursuant to Rule 14a-8(j) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to notify the Securities and Exchange Commission (the "Commission") of the intention of the Company to exclude certain portions of the supporting statement of a shareholder proposal (the "Proposal") submitted by Mr. William Steiner (directly or through his representative, John Chevedden, the "Proponent") from the Company's proxy statement and form of proxy for the Company's 2005 annual meeting of stockholders (the "Proxy Materials"). The Company respectfully requests that the Division of Corporation Finance not recommend to the Commission that any enforcement action be taken if the Company excludes portions of the supporting statement of the Proposal from the Proxy Materials for the reasons set forth below. In accordance with Rule 14a-8(j)(2), there are submitted herewith five additional copies of this letter and the attached materials.

To meet printing and distribution requirements, the Company anticipates that it will begin printing its Proxy Materials on or about September 12, 2005 and start mailing its Proxy Materials to stockholders on or about September 19, 2005. The Company currently anticipates filing its definitive Proxy Materials with the Commission on or about September 19, 2005. The Company plans to hold its annual meeting of stockholders on or about October 27, 2005.

I. The Proposal

The Company received correspondence containing a cover letter and the Proposal from the Proponent on May 24, 2005, and subsequently received a Statement of Ownership Record from the Proponent on June 7, 2005, copies of which have been attached hereto as Attachment A. While the cover letter is dated September 28, 2004, the Company has no record of receipt of the Proposal until May 24, 2005. The Proposal seeks shareholder approval for the adoption of a rule that the Board of Directors of the Company (the "Board") will redeem any current or future poison pill unless such poison pill is submitted to a shareholder vote. The Proposal states in its entirety:

May 23, 2005

3Redeem or Vote Poison Pill

RESOLVED: Shareholders request that our Board adopt a rule that our Board will redeem any current or future poison pill unless such poison pill is submitted to a shareholder vote, as a separate ballot item, as soon as may be practicable.

William Steiner, 112 Abbotsford Gate, Piedmont, NY 10968 submitted this proposal.

Pills Entrench Current Management

"Poison pill ... prevent shareholders, and the overall market, from exercising their right to discipline management by turning it out. They entrench the current management, even when it's doing a poor job. They water down shareholders' votes and deprive them of a meaningful voice in corporate affairs."

"Take on the Street" by Arthur Levitt, SEC Chairman, 1993-2001

Progress Begins with a First Step

I believe the reason to take the above RESOLVED step is reinforced by our directors' vulnerability when compared to best practices in corporate governance. For instance in 2005 it was reported (concerns are inserted):

The Corporate Library, an independent investment research firm in Portland, Maine, rated our company:

"D" in Accounting

Our company has a poison pill with a low 10% trigger

An overwhelming 75% super majority shareholder vote was required to make certain key changesentrenchment concern

Four directors were CEOsover commitment concern

Two directors held 4 to 7 board seatsover commitment concern

Three directors had 17 to 23 years tenurelack of independence concern

One director owned no stocklack of commitment concern

One director failed on attendancelack of commitment concern

The chairman of our compensation committee had 23 years tenurelack of independence concern

I believe the above slate of under-achievement practices reinforce the reason to adopt the above RESOLVED statement to help improve our corporate governance stature.

If a poison pill makes our stock difficult to sellthe value of our stock could suffer.

Redeem or Vote Poison Pili

Yes on 3

* * *

For the reasons stated below, the Company would like to omit certain portions of the Supporting Statement to the Proposal from its Proxy Materials.

II. Portions of the Supporting Statement May Be Omitted Under Rule 14a-8(i)(3) Because They Contain Statements or Assertions That the Company Can Demonstrate Objectively To Be Materially False or Misleading.

Rule 14a-8(i)(3) permits a company to exclude portions of a sharcholder proposal or supporting statement from its proxy statement if such portions are contrary to any of the Commission's proxy rules, including Rule 14a-9, which prohibits materially false or misleading statements in proxy soliciting materials. Prior to the Staff's September 15, 2004 Legal Bulletin (See SEC Staff Legal Bulletin No. 14B (CF) (September 15, 2004)), this included factually false or misleading statements, opinions stated as fact, and undocumented assertions of fact. See, e.g., Monsanto Co. (Nov. 26, 2003) (false or misleading statements, opinions stated as fact, and undocumented assertions of fact); Sysco Corp. (Aug. 12, 2003) (false or misleading statements and undocumented assertions of fact); Kroger Co. (April 11, 2003) (false or misleading statements). Although in its September 15, 2004 Bulletin the Staff announced that opinions stated as facts and undocumented assertions of fact would no longer be excludable, it reaffirmed that materially false or misleading factual statements may properly be excluded under Rule 14a-8(i)(3). However, in order to exclude such statements, the Staff declared that companies must demonstrate objectively that such statements are false or misleading. In the Company's view, the Proposal's supporting statement contains several statements that the Company believes are either false or misleading for the reasons set forth below.

Beginning with "The Corporate Library", and ending with "had 23 years tenurelack of independence", the supporting statement includes several false or misleading statements. In relevant part, it reads as follows:

The Corporate Library ... rated our company: "D" in Accounting.

Our company has a poison pill with a "low" 10% trigger. [Emphasis Added]

An "overwhelming" 75% super majority shareholder vote was required to make certain key changesentrenchment concern. [Emphasis Added]

Four directors were CEOsover-commitment concern.

One director owned no stocklack of commitment concern.

One director failed on attendancelack of commitment concern.

First, the Proponent's statement regarding the Company's accounting rating is out of context. The Company received ratings on eight corporate topics from the Corporate Library, including board composition, CEO compensation, shareholder responsiveness, litigation and regulatory problems, takeover defenses, accounting, strategic decision making and analyst adjustment. The Company received an overall board effectiveness rating of "B" and a "best practices" compliance score of 90%. The Proponent's use of one subcomponent of the overall rating does not accurately portray the effectiveness of the Company's Board as determined by the Corporate Library, and instead takes one portion of a comprehensive study out of context, which has the potential to mislead the Company's stockholders. Moreover, the report is not available to stockholders generally because it can only be obtained by paying a fee, so stockholders will not generally know or be able to readily determine that the Company received a far more favorable overall score than the one score included in the Proponent's Supporting Statement. Enclosed for your information is a copy of the Corporate Library Report. The Company believes the statement, without further context, is misleading and should be omitted from the Proposal.

The Company believes the use of the word "low" in the second bulleted item makes that statement misleading. It is a fact that the Company has a poison pill with a 10% trigger. However, by referring to it as a "low" trigger, a stockholder may not appreciate all of the considerations that were made by the board in selecting that threshold. The Company has numerous provisions in its certificate of incorporation and bylaws that provide significant rights to stockholders that are not necessarily typical for a Delaware corporation, including the ability of stockholders to call special meetings and the ability of stockholders to elect to cumulate votes in connection with the election of directors. Given these substantial differences, the word "low" should be omitted because, without context, it could mislead stockholders.

Next, the third bulleted item states that "An `overwhelming' 75% super majority shareholder vote was required to make certain key changesentrenchment concern." While it is true that the Company's bylaws provide that any amendment to the Company's bylaws must be approved by the Board of Directors or 75% of the Company's outstanding shares (the "Voting Requirement"), the Company believes that the statement is misleading to stockholders because the Voting Requirement does not present an entrenchment concern. As mentioned above, Sun's bylaws are not necessarily typical for a Delaware corporation and include numerous provisions designed to prevent entrenchment, including the ability of stockholders to remove directors, with or without cause, the ability of stockholders to act by written consent, the ability of stockholders to call special meetings and the ability of stockholders to cumulate votes in connection with the election of directors. Further, the provision in the bylaws with respect to the ability of stockholders to call a special meeting can only be amended with the approval of 75% of the Company's outstanding sharesnot by the Board of Directorsprotecting the stockholders' right to call such meetings. As a result, the Company believes that this statement should be amended or struck from the Proposal to avoid misleading stockholders.

Next, the Proponent states that four of the Company's directors were CEOs, causing the potential for over-commitment. In fact, one of these directors is the CEO of the Company. As a result, the Proponent has overstated the potential over-commitment concern, and the Company believes that the statement should be amended or struck from the Proposal to avoid misleading stockholders.

The Proponent's statement regarding the lack of ownership of the Company's stock by one of the directors is false, as the statement does not represent the current facts. At the time the correspondence was apparently first written on September 28, 2004, it is true that one of the directors of the Company, Lynn Turner, did not own any of the Company's stock. However, as timely reported on a Form 4 filing, on February 25, 2005, Mr. Turner purchased stock in the Company, and presently continues to hold those shares. Because of a change in circumstance, this statement included in the Proponent's supporting statement is now false, and the Company believes it should be removed from the Proposal.

Finally, the lack of full disclosure of the circumstances surrounding a Company director's inability to attend Board meetings makes the statement next to the last bullet point misleading. During our 2004 fiscal year, our Board held ten meetings. One of our Board members (who was not a member of any committee of the Board during that year) missed four Board meetings in order to care for his wife, who died that year after a long illness. This fact was disclosed publicly by the Company in its last proxy statement and the director's attendance for the past fiscal year was in excess of 75% of the aggregate number of meetings of the board and the committee on which he served. As this statement does not provide complete disclosure with respect to the director's absence from certain of the Company's Board meetings, the Company believes it should be removed for its potential to mislead the Company's shareholders to believe that the director lacks commitment to his service as a Board member.

As stated above, the Company respectfully requests permission to exclude the false or misleading statements noted above from the Proposal in its Proxy Materials.

* * * * *

III. Conclusion

For the foregoing reasons, the Company respectfully requests that the Staff confirm that it would not recommend enforcement action if the Company omits portions of the supporting statement from its Proxy Materials. Attached hereto is a redacted version of the supporting statement that the Company proposes to include with the Proposal. If you have any questions or if the Staff is unable to agree with our conclusions without additional information or discussions, we respectfully request the opportunity to confer with members of the Staff prior to issuance of any written response to this letter. Please do not hesitate to call the undersigned at (650) 565-3522.

Please acknowledge receipt of this letter and its attachment by date-stamping the enclosed copy of the first page of this letter and returning it in the self-addressed stamped envelope provided for your convenience.

Sincerely,

WILSON SONSINI GOODRICH & ROSATI

Professional Corporation

/s/

Katharine A. Martin

Enclosures: Letter from William Steiner dated September 28, 2004
Proposal and Supporting Statement
Statement of Ownership
Redacted version of Proposal's supporting statement
Corporate Library Report for the Company

cc: John Chevedden
2215 Nelson Ave., No. 205
Redondo Beach, CA 90278

[APPENDIX]

May 23, 2005

3Redeem or Vote Poison Pill

RESOLVED: Shareholders request that our Board adopt a rule that our Board will redeem any current or future poison pill unless such poison pill is submitted to a shareholder vote, as a separate ballot item, as soon as may be practicable.

William Steiner, 112 Abbottsford Gate, Piermont, NY 10968 submitted this proposal.

Pills Entrench Current Management

"Poison pills ... prevent shareholders, and the overall market, from exercising their right to discipline management by turning it out. They entrench the current management, even when it's doing a poor job. They water down shareholders' votes and deprive them of a meaningful voice in corporate affairs."

"Take on the Street" by Arthur Levitt, SEC Chairman, 1993-2001

Progress Begins with a First Step

I believe the reason to take the above RESOLVED step is reinforced by our directors' vulnerability when compared to best practices in corporate governance. For instance in 2005 it was reported (and concerns are inserted).

The Corporate Library, an independent investment research firm in Portland, Maine, rated our company:

"D" in Accounting.

Our company has a poison pill with a low 10% trigger.

An overwhelming 75% super majority shareholder vote was required to make certain key changesentrenchment concern.

Four directors were CEOsover-commitment concern.

Two directors held 4 to 7 board seatsover-commitment concern.

Three directors had 17 to 23 years tenurelack of independence concern.

One director owned no stocklack of commitment concern.

One director failed on attendancelack of commitment concern.

The chairman of our compensation committee had 23 years tenurelack of independence concern.

I believe the above slate of under-achievement practices reinforce the reason to adopt the above RESOLVED statement to help improve our corporate governance stature.

If a poison pill makes our stock difficult to sellthe value of our stock could suffer.

Redeem or Vote Poison Pill Yes on 3

Notes:

The above format is the format submitted and intended for publication.

The company is requested to assign a proposal number (represented by "3" above) based on the chronological order in which proposals are submitted. The requested designation of "3" or higher number allows for ratification of auditors to be item 2.

This proposal is believed to conform with Staff Legal Bulletin No. 14B (CF), September 15, 2004 which includes:

Accordingly, going forward, we believe that it would not be appropriate for companies to exclude supporting statement language and/or an entire proposal in reliance on rule 14a-8(i)(3) in the following circumstances:

the company objects to factual assertions because they are not aupported;

the company objects to factual assertions that, while not materially false or misleading, may be disputed or countered;

the company objects to factual assertions because those assertions may be interprated by shareholders in a manner that is Unfavorable to the company, its directors, or its officers; and/or

the company objects to statements because they represent the opinion of the shareholder proponent or a referenced source, but the statements are not identified specifically as such.

Please note that the title of the proposal is part of the argument in favor of the proposal. In the interest of clarity and to avoid confusion the title of this and each other ballot item is requested to be consistent throughout the proxy materials.

Please advise if there is any typographical question.

Stock will be held until after the annual meeting.

Redactions are denoted with [***], additions are left in brackets.

May 23, 2005

3Redeem or Vote Poison Pill

RESOLVED: Shareholders request that our Board adopt a rule that our Board will redeem any current or future poison pill unless such poison pill is submitted to a shareholder vote, as a separate ballot item, as soon as may be practicable.

William Steiner, 112 Abbotsford Gate, Piedmont, NY 10968 submitted this proposal.

Pills Entrench Current Management

"Poison pills...prevent shareholders, and the overall market, from exercising their right to discipline management by turning it out. They entrench the current management, even when it's doing a poorjob. They water down shareholders' votes and deprive them of a meaningful voice in corporate affairs."

"Take on the Street" by Arthur Levitt, SEC Chairman, 1993-2001

Progress Begins with a First Step

I believe the reason to take the above RESOLVED step is reinforced by our directors vulnerability when compared to best practices in corporate governance. For instance in 2005 it was reported (concerns are inserted).

[*************]

[*************]

Our company has a poison pill with a [***] 10% trigger

[*************]

[***] [Three] directors were CEOsover commitment concern

Two directors held 4 to 7 board seatsover commitment concern

Three directors had 17 to 23 years tenurelack of independence concern

[*************]

[*************]

The chairman of our comperisation committee had 23 years tenurelack of independence concern

I believe the above slate of under-achievement practices reinforce the reason to adopt the above RESOLVED statement to help improve our corporate governance stature.

If a poison pill makes our stock difficult to sellthe value of our stock could suffer.

Redeem or Vote Poison Pill

Yes on 3

[STAFF REPLY LETTER]

July 21, 2005

Response of the Office of Chief Counsel Division of Corporation Finance

Re: Sun Microsystems, Inc. Incoming letter dated July 1, 2005

The proposal requests that the board adopt a rule requiring the board to redeem any current or future poison pill unless it is submitted to a shareholder vote.

We are unable to concur in your view that Sun may exclude portions of the supporting statement under rule 14a-8(i)(3). Accordingly, we do not believe that Sun may omit portions of the supporting statement from its proxy materials in reliance on rule 14a-8(i)(3).

Sincerely,

/s/

Mark F. Vilardo
Special Counsel