SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)
__X__Quarterly  report  pursuant  to  Section  13  or  15(d)  of  the Securities
     Exchange  Act  of 1934 for the quarterly period ended September 29, 1996 or

_____Transition  report  pursuant  to  Section  13  or  15(d)  of the Securities
     Exchange Act of 1934 for the transition period from ______ to _______

                         Commission file number:0-15086

                             SUN MICROSYSTEMS, INC.
             (Exact Name of registrant as specified in its charter)

                  Delaware                               94-2805249
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

                2550 Garcia Avenue, Mountain View, CA 94043-1100
             (Address of principal executive offices with zip code)

Registrant's telephone number,                         (415) 960-1300
    including area code:

                                       N/A
              (Former name, former address and former fiscal year,
                          if changed since last report)

  Indicate  by check  mark  whether  the  registrant  (1) has filed all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                            YES  X        NO______
                                ---

                     APPLICABLE ONLY TO ISSUERS INVOLVED IN
                          BANKRUPTCY PROCEEDINGS DURING
                            THE PRECEDING FIVE YEARS:

  Indicate by check mark  whether the  registrant  has filed all  documents  and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.

                            YES ____       NO______

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

  Indicate the number of shares  outstanding of each of the issuer's  classes of
common stock, as of the latest practical date.

            Class                              Outstanding at September 29, 1996
Common stock - $0.00067 par value                        183,648,532

                                                       
<PAGE>


                                      INDEX



                                                                            PAGE
                                                                            ----

COVER PAGE                                                                   1

INDEX                                                                        2

PART I - FINANCIAL INFORMATION

    Item 1 - Financial Statements
             Condensed Consolidated Balance Sheets                           3
             Condensed Consolidated Statements of Income                     4
             Condensed Consolidated Statements of Cash Flows                 5
             Notes to Condensed Consolidated Financial Statements            6

    Item 2 - Management's Discussion and Analysis of
             Results of Operations and Financial Condition                   8

PART II - OTHER INFORMATION
    Item 5 - Other Information                                               13
    Item 6 - Exhibits and Reports on Form 8 - K                              14

SIGNATURES                                                                   15

                                        2

<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                             SUN MICROSYSTEMS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)


                                                 September 29,         June 30,
                                                     1996                1996
                                                 -------------         --------
                                                  (unaudited)
ASSETS
Current assets:
     Cash and cash equivalents                   $   460,745        $   528,854
     Short-term investments                          203,210            460,743
     Accounts receivable, net                      1,295,429          1,206,612
     Inventories                                     461,842            460,914
     Deferred tax asset                              186,531            177,554
     Other current assets                            245,078            199,059
                                                 ------------       -----------
          Total current assets                     2,852,835          3,033,736
Property, plant and equipment, at cost             1,356,148          1,282,384
Accumulated depreciation and amortization           (793,255)          (748,535)
                                                 ------------       -----------
                                                     562,893            533,849
Other assets, net                                    206,674            233,324
                                                 -----------        -----------
                                                 $ 3,622,402        $ 3,800,909
                                                 ===========        ===========



LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Short-term borrowings                      $     44,923        $     49,161
     Accounts payable                                345,139             325,067
     Accrued liabilities                             777,420             801,550
     Other current liabilities                       265,738             313,491
                                                ------------        ------------
          Total current liabilities                1,433,220           1,489,269
Long-term debt and other obligations                  68,944              60,154
Total stockholders' equity                         2,120,238           2,251,486
                                                ------------        ------------
                                                  $3,622,402          $3,800,909
                                                ============        ============


                             See accompanying notes

                                        3

<PAGE>


                             SUN MICROSYSTEMS, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (unaudited)
                    (in thousands, except per share amounts)


                                                           Three Months Ended,
                                                       -------------------------
                                                       September 29,  October 1,
                                                           1996         1995
                                                       -------------  ----------
Net revenues                                            $1,859,019    $1,485,278
Cost and expenses:
       Cost of sales                                       972,101       816,833
       Research and development                            186,268       144,085
       Selling, general and administrative ..              524,666       411,416
                                                        ----------    ----------
           Total costs and expenses                      1,683,035     1,372,334
Operating income                                           175,984       112,944
Interest income, net                                         5,472        11,609
                                                        ----------    ----------
Income before income taxes                                 181,456       124,553
Provision for income taxes                                  58,066        39,857
                                                        ----------    ----------
Net income                                              $  123,390    $   84,696
                                                        ==========    ==========

Net income per common and
       and common - equivalent
       share                                            $     0.63    $     0.42
                                                        ==========    ==========

Common and common-equivalent
       shares used in the calculation
       of net income per share                             195,058       199,324
                                                        ==========    ==========



                             See accompanying notes.

                                        4

<PAGE>


<TABLE>
                             SUN MICROSYSTEMS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
                                 (in thousands)

<CAPTION>
                                                                             Three Months Ended
                                                                         --------------------------
                                                                         September 29,   October 1,
                                                                             1996           1995
                                                                         -----------    -----------

<S>                                                                      <C>            <C>
Cash flow from operating activities:
       Net income                                                        $   123,390    $    84,696
       Adjustments to reconcile net income
                to operating cash flows:
                Depreciation, amortization and
                         other non-cash items                                 86,887         72,202
                Tax benefit of options exercised                               7,655         10,737
                Net (increase) decrease in accounts receivable               (88,817)       114,218
                Net increase in inventories                                     (928)       (33,031)
                Net increase  in accounts payable                             20,072         25,345
                Net increase in other current
                         and non-current assets                              (35,988)       (39,544)
                Net decrease in other current
                         and non-current liabilities                         (44,119)      (135,106)
                                                                         -----------    -----------
Net cash provided from operating activities                                   68,152         99,517
                                                                         -----------    -----------
Cash flow from investing activities:
       Acquisition of property, plant and equipment                          (94,890)       (75,900)
       Acquisition of other assets                                            (8,119)       (25,754)
       Acquisition of short-term investments                                 (17,157)      (695,886)
       Maturities of short-term investments                                  270,196      1,146,591
                                                                         -----------    -----------
Net cash provided from investing activities                                  150,030        349,051
                                                                         -----------    -----------
Cash flow from financing activities:
       Issuance of common stock                                                8,595         25,982
       Acquisition of treasury stock                                        (271,344)      (455,032)
       Proceeds from employee stock purchase plans                            17,141         14,794
       Reduction of short - term borrowings, net                              (4,238)       (22,709)
       Reduction of long - term borrowings and other                         (36,445)       (39,857)
                                                                         -----------    -----------
Net cash used by financing activities                                       (286,291)      (476,822)
                                                                         -----------    -----------
Net decrease in cash and cash equivalents                                $   (68,109)   $   (28,254)
                                                                         ===========    ===========
Supplemental disclosures of cash flow information:
       Cash paid during the period for:
       Interest                                                          $     4,189    $     5,388
       Income taxes                                                      $    46,524    $    64,454

<FN>
                                               See accompanying notes.
</FN>
</TABLE>

                                        5

<PAGE>


                             SUN MICROSYSTEMS, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



BASIS OF PRESENTATION

         The  consolidated  financial  statements  include  the  accounts of Sun
         Microsystems,  Inc.  ("Sun" or the  "Company")  and its  wholly - owned
         subsidiaries.   Intercompany   accounts  and  transactions   have  been
         eliminated.  Certain amounts from prior years have been reclassified to
         conform to current year presentation.

         While the quarterly financial  information is unaudited,  the financial
         statements included in this report reflect all adjustments  (consisting
         of normal recurring  accruals) that the Company considers necessary for
         a fair  presentation  of the  results  of  operations  for the  interim
         periods  covered and of the  financial  condition of the Company at the
         date of the interim balance sheet.  The results for the interim periods
         are not necessarily  indicative of the results for the entire year. The
         information  included in this report should be read in conjunction with
         the  1996  Annual  Report  to  Stockholders  which is  incorporated  by
         reference in the Company's 1996 Form 10-K.

INVENTORIES (in thousands)

                               September 29, 1996                 June 30, 1996
                               ------------------                 -------------
         Raw materials              $276,801                         $267,811

         Work in process              59,722                           58,337

         Finished goods              125,319                          134,766
                                    --------                         --------

                                    $461,842                         $460,914
                                    ========                         ========


INCOME TAXES

The Company accounts for income taxes under the liability method of Statement of
Financial  Accounting  Standards  No. 109. The provision for income taxes during
the interim periods considers  anticipated annual income before taxes,  earnings
of foreign subsidiaries  permanently  invested in foreign operations,  and other
differences.

STOCK SPLIT

On August 8, 1996, the Company announced a two-for-one stock split (payable as a
stock dividend), subject to stockholder approval of an increase in the Company's
authorized  shares  of common  stock.  Subject  to  receiving  such  stockholder
approval, stockholders of record as of the close of the business on November 18,
1996,  will be issued on December 10, 1996 one additional  share of common stock
for each share of common stock held. The amounts  presented for October 1, 1995,
June 30, 1996, and September 29, 1996 do not reflect the stock split.


                                       6


<PAGE>


COMMON STOCK REPURCHASE

In July 1995, the Board of Directors approved a plan to repurchase approximately
24 million  shares of the Company's  common stock.  Repurchases  under this plan
were completed in August 1996 at a total cost of  approximately  $696 million of
which  approximately  4.4 million  shares were  repurchased  for $236 million in
first quarter of 1997. In addition,  the Company's Board of Directors approved a
systematic  repurchase  program  in August  which  will  enable  the  Company to
systematically  repurchase a portion of the shares it expects to issue under its
1990 Long-Term  Equity  Incentive Plan.  Total  repurchases  under the Long-term
Equity  Incentive  Plan  repurchase   program  will  not  exceed   $450,000,000.
Approximately  440,000 shares and 180,000 shares were repurchased under the ESPP
systematic  stock buyback  program and Long-Term  Equity  Incentive Plan buyback
program, respectively.

                                        7

<PAGE>



ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
                  OPERATIONS AND FINANCIAL CONDITION

The following table sets forth items from the Condensed Consolidated  Statements
of Income as a percentage of net revenues:

                                              Three Months Ended,
                                              -------------------
                                          September 29,      October 1,
                                              1996              1995
                                              ----              ----
Net revenues                                 100.0%            100.0%

Cost of sales                                 52.3              55.0
                                             -----             -----
         Gross margin                         47.7              45.0
Research and development                      10.0               9.7
Selling, general and administrative           28.2              27.7
                                             -----             -----
Operating income                               9.5               7.6
Interest income, net                            .3               0.8
                                               ---             -----

Income before income taxes                     9.8               8.4
Provision for income taxes                     3.2               2.7
                                             -----             -----

         Net income                            6.6%              5.7%
                                             =====             =====

RESULTS OF OPERATIONS

Net revenues

Net  revenues  were  $1.859  billion  for the  first  quarter  of  fiscal  1997,
representing an increase of 25.2 % over the corresponding period of fiscal 1996.
Over two-thirds of the growth in revenues resulted from strong demand for richly
configured  servers,  and high-end  desktop  systems,  and from memory,  storage
options, and accessories shipped as part of system sales and as separate orders.
The remaining  increase  reflects  growth in revenues from other Sun businesses,
including service, aftermarketing, microprocessors, and software.

Domestic  net  revenues  increased  by 25.8% while  international  net  revenues
(including United States exports) grew 24.5% in the first quarter of fiscal 1997
compared  with the  corresponding  period of fiscal 1996.  European net revenues
increased 26.6% while net revenues in rest of world increased 22.4% in the first
quarter of fiscal 1997 when  compared with the  corresponding  periods of fiscal
1996.  These  increases  are due  primarily  to continued  strengthening  of the
markets in Japan, and the United Kingdom and the expanding  markets in Korea and
Latin America.

Compared with the first quarter of fiscal 1996,  the dollar in the first quarter
of fiscal 1997 has remained  relatively  consistent  against most major European
currencies and strengthened  significantly  against the Japanese Yen.


                                       8


<PAGE>


Management  has  estimated  that the net  impact  of  currency  fluctuations  on
operating  results,  while  slightly  unfavorable,  was not  significant  in the
quarter ended September 29, 1996.

Gross margin

Gross margin was 47.7% for the first  quarter of fiscal 1997,  compared with 45%
for the  corresponding  period of fiscal 1996.  The increase in the gross margin
reflects  the effects of increased  revenue  generated  from richly  configured,
higher margin servers and memory storage options.

While the factors described above resulted in a favorable impact on gross margin
for the first quarter of fiscal 1997,  systems and memory repricing  actions are
likely to be initiated in the future, which could result in downward pressure on
gross margins.  Sun's future  operating  results could be adversely  affected if
such  repricing  actions were to occur and the Company is unable to mitigate the
margin  pressure by maintaining a favorable mix of systems,  software,  service,
and other revenues and / or by achieving component cost reductions and operating
efficiencies.

Research and development

Research and development (R&D) expenses were $186.3 million in the first quarter
of fiscal 1997,  compared with $144.1  million for the  corresponding  period of
fiscal 1996. As a percentage of net revenues,  R&D expenses increased to 10% for
the first quarter of fiscal 1997 from 9.7% in the corresponding period of fiscal
1996.  Approximately  half of the dollar increase in the first quarter of fiscal
1997 over the corresponding period in fiscal 1996 reflects continued development
of UltraSPARC  systems and further  development of products acquired through the
acquisitions of Integrated  Micro  Products,  plc and Cray Business  Systems,  a
division of Cray Research,  Inc. The remaining  increase in dollar amount of R&D
expenses  is due  primarily  to  increased  compensation  as a result  increased
staffing.

Selling, general and administrative

Selling,  general and administrative  (SG&A) expenses were $524.7 million in the
first quarter of fiscal 1997 compared with $411.4 million for the same period of
fiscal 1996. As a percentage of net revenues,  SG&A expenses  increased to 28.2%
in the first  quarter of fiscal 1997 from 27.7% in the  corresponding  period of
fiscal 1996.  Approximately  half of the dollar increase in 1997 is attributable
to increased  marketing  costs  related to new product  introductions  and other
promotional  programs,  and an  increase in sales  headcount  as compared to the
first quarter of fiscal 1996.  The dollar  increase  also  reflects  investments
aimed at improving Sun's own business processes.

Interest income, net

Net  interest  income was $5.5  million  for the first  quarter of fiscal  1997,
compared with $11.6 million in net interest income for the corresponding  period
in fiscal 1996.  The decrease in 1997 is primarily the result of lower  interest
earnings on a smaller portfolio of cash and short-term investments.

Income taxes

The Company's  effective  income tax rate for the first  quarters of both fiscal
1997 and 1996 was 32%.


                                       9


<PAGE>


FUTURE OPERATING RESULTS

This following section of the report contains forward-looking  statements within
the  meaning of the  Private  Securities  Litigation  Reform  Act of 1995.  Such
forward-looking  statements  involve  risks  and  uncertainties  so that  actual
results may vary materially.

The future  operating  results  discussed below  represent  specific risks which
could impact the  financial  condition  and results over the next few  quarters.
This  information  below should be read in  conjunction  with the Company's Form
10-K  Annual  Report to  Stockholders  for its fiscal  year ended June 30,  1996
("1996 Form 10-K), as well as with the 1996 Annual Report to Stockholders  which
is incorporated by reference into the Company's 1996 Form 10-K.

The market for Sun's products and services is intensely  competitive and subject
to  continuous,  rapid  technological  change,  short  product  life  cycles and
frequent  product  performance  improvements  and price  reductions.  Due to the
breadth of the Company's  product lines and the  scalability of its products and
network  computing model, Sun competes in many segments of the network computing
market across a broad spectrum of customers. The Company expects the markets for
its products and technologies,  as well as its competitors  within such markets,
will continue to change as the rightsizing trend shifts customer buying patterns
to network  based systems which often employ  solutions  from multiple  vendors.
Competition  in these  markets  will also  continue to  intensify as Sun and its
competitors,  principally  Hewlett-Packard  Corporation,  International Business
Machines  Corporation,  Digital  Equipment  Corporation,  and Silicon  Graphics,
aggressively  position  themselves  to benefit  from this  shifting  of customer
buying patterns and demand.  The Company is also facing  competition  from these
competitors,  as well as other systems  manufacturers,  such as Compaq  Computer
Corporation  and Dell  Computer  Corporation,  with respect to such  competitors
products based on microprocessors from Intel Corporation coupled with Windows NT
operating system software from Microsoft Corporation. These products demonstrate
the  viability  of  certain  networked  personal  computer  solutions  and  have
increased the competitive  pressure,  particularly in the Company's  workstation
and lower-end server product lines.  Finally, the timing of introductions of new
products  and services by Sun's  competitors  may  negatively  impact the future
operating results of the Company,  particularly when such introductions occur in
periods  leading  up to the  Company's  introduction  of its  own  new  enhanced
products.  The Company expects this pressure to continue and intensify in fiscal
1997.  While many other  technical,  service and support  capabilities  affect a
customer's buying decision,  the Company's future operating results will depend,
in part, on its ability to compete with these technologies.

The Company's future operating  results will depend to a considerable  extent on
its  ability to rapidly  and  continuously  develop,  introduce,  and deliver in
quantity  new  systems,   software,   and  service  products,  as  well  as  new
microprocessor  technologies,  that offer its customers enhanced  performance at
competitive prices. The development of new high - performance computer products,
such as the  Company's  recent  development  of  UltraSPARC,  is a  complex  and
uncertain  process  requiring  high  levels  of  innovation  from the  Company's
designers  and  suppliers,   as  well  as  accurate   anticipation  of  customer
requirements and technological trends. Once a hardware product is developed, the
Company must rapidly bring such products to volume manufacturing, a process that
requires accurate  forecasting of volumes,  mix of products and  configurations,
among other things in order to achieve acceptable yields and costs.

Accordingly,  with the  introduction  of the Company's  enhanced  server systems
introduced  during  fiscal  1996,  future  operating  results  will  depend to a
considerable  extent of the  Company's  ability to closely  manage these product
introductions,  as well as future product  introductions  , in order to minimize
unfavorable patterns of customer orders, to reduce levels of older inventory and
to ensure  that  adequate  supplies of new  products  can be  delivered  to meet
customer  demand.  The  ability  of the  Company  to match  supply and demand is
further  complicated by the Company's need to adjust prices to reflect  changing
competitive  market conditions as well as the variability and timing of customer
orders with respect to the Company's older products.  As a result, the


                                       10


<PAGE>


Company's  operating  results could be adversely  affected if the Company is not
able to  correctly  anticipate  the  level of  demand  for the mix of  products.
Because  the  Company  is  continuously  engaged  in this  product  development,
introduction,  and transition  process,  its operating results may be subject to
considerable fluctuation, particularly when measured on a quarterly basis.

The Company is increasingly dependent on the ability of its suppliers to design,
manufacture,   and  deliver   advanced   components   required  for  the  timely
introduction  of new products.  The failure of any of these suppliers to deliver
components  on time or in  sufficient  quantities,  or the failure of any of the
Company's  own  designers to develop  advanced  innovative  products on a timely
basis, could result in a significant  adverse impact on the Company's  operating
results. The inability to secure enough components to build products,  including
new products, in the quantities and configurations required, or to produce, test
and  deliver  sufficient  products  to meet  demand  in a timely  manner,  would
adversely  affect the Company's net revenues and  operating  results.  To secure
components for development,  production,  and introduction of new products,  the
Company frequently makes advanced payments to certain suppliers and often enters
into  noncancelable  purchase  commitments  with  vendors  early  in the  design
process.  Due to the variability of material requirement  specifications  during
the  design  process,   the  Company  must  closely  manage  material   purchase
commitments and respective delivery  schedules.  In the event of a delay or flaw
in the design  process,  the  Company's  operating  results  could be  adversely
affected due to the Company's obligations to fulfill such noncancelable purchase
commitments.

Generally,  the computer  systems sold by Sun, such as the UltraSPARC  products,
are the result of hardware  and  software  development,  such that delays in the
software  development  can delay the ability of the Company to ship new hardware
products.  In  addition,  adoption of a new release of an  operating  system may
require  effort on the part of the  customer  and  porting by  software  vendors
providing  applications.  As a result, the timing of conversion to a new release
is  inherently  unpredictable.  Moreover,  delays by customers in adopting a new
release of an operating system can limit the  acceptability of hardware products
tied to that release.  Such delays could adversely  affect the future  operating
results of the Company.

Seasonality also affects the Company's  operating  results,  particularly in the
first quarter of each fiscal year. In addition, the Company's operating expenses
are  increasing as the Company  continues to expand its  operations,  and future
operating  results  will be  adversely  affected  if  revenues  do not  increase
accordingly.  Additionally,  the Company plans to continue to evaluate and, when
appropriate,  make  acquisitions  of  complimentary  technologies,  products  or
businesses.  As part of this process,  the Company will continue to evaluate the
changing  value of its assets,  and when  necessary,  make  adjustments to them.
While the Company cannot  predict what effect these various  factors may have on
its financial  results,  the  aggregate  effect of these and other factors could
result in significant  volatility in the Company's future  performance and stock
price.

LIQUIDITY AND CAPITAL RESOURCES

Total assets at September 29, 1996 decreased by approximately  $179 million from
June 30,  1996,  due  principally  to decreases in cash,  cash  equivalents  and
short-term  investments  of $326  million  and  other  long-term  assets  of $27
million,  offset by  increases  in accounts  receivable  of $89  million,  other
current  assets of $46  million and  property,  plant and  equipment-net  of $29
million.  Cash was  principally  used for the  repurchase of 5 million shares of
common  stock  for  $271  million,  capital  expenditures  of $95  million,  and
scheduled  debt  repayments of $40 million.  Other  long-term  assets  decreased
primarily due to amortization of capitalized software and intangible assets. The
increase in accounts  receivable reflects a larger percentage of sales occurring
near the end of the  quarter  and the  timing of cash  receipts.  Other  current
assets  increased  due to the timing of payments for  insurance and other taxes.
The increase in property,  plant and  equipment  reflects  capital  additions to
support increased headcount, primarily in the Company's engineering, service and
marketing organizations.


                                       11


<PAGE>


Total liabilities decreased $47 million from June 30, 1996, due principally to a
decrease in accrued  liabilities of $24 million and other current liabilities of
$48 million,  offset by an increase in accounts payable of $20 million.  The net
decrease  in  accrued   liabilities   reflects  payments  of  performance  based
compensation,  commissions, and income taxes, offset by an increase in marketing
and  Employee  Stock  Participation  Program  liabilities.   The  other  current
liabilities  decrease  primarily  reflects  the  final  payment  related  to the
Company's  10.55%  senior  notes due  September  1996.  The increase in accounts
payable reflects increased inventory receipts during the last three weeks of the
quarter as compared to the fourth quarter of fiscal 1996. The Company  purchased
Phase II and Phase III of its  campus  located  in Menlo  Park,  California  for
approximately $116 million in October 1996.

At September 29, 1996, the Company's  primary sources of liquidity  consisted of
cash,  cash  equivalents  and  short-term  investments  of  $664  million  and a
revolving  credit  facility  with  banks  aggregating  $300  million,  which was
available  subject to compliance with certain  covenants.  The Company  believes
that the liquidity provided by existing cash and short-term  investment balances
and the borrowing  arrangements  described  above will be sufficient to meet the
Company's  capital  requirements  through  fiscal  1997.  However,  the  Company
believes the level of financial resources is a significant competitive factor in
its industry and may choose at any time to raise additional capital through debt
or equity financing to strengthen its financial position,  facilitate growth and
provide the Company with  additional  flexibility  to take advantage of business
opportunities  that may arise.  The statements  regarding the sufficiency of the
Company's capital  resources are forward looking  statements which involve risks
and  uncertainties and actual results may vary materially as a result of factors
described above under "Future  Operating  Results," as well as factors described
under the Caption "Item 1 - Business" in the Company's 1996 Form 10-K.



                                       12


<PAGE>


ITEM 5 - OTHER INFORMATION

SCHEDULE OF SALES BY EXECUTIVE OFFICERS DURING THE QUARTER

      The following is a summary of all sales of the  Company's  Common Stock by
the Company's  executive officers and directors who are subject to Section 16 of
the Securities Exchange Act of 1934, as amended, during the fiscal quarter ended
September 29,1996:

    OFFICER/               DATE                  PRICE           NUMBER OF
    DIRECTOR                                                     SHARES SOLD
    ============================================================================

Michael Lehman            8/8/96                $55.00           10,000
                          8/9/96                $56.00            5,000
                          8/9/96                $55.50            5,000
                          8/28/96               $56.5625          5,000
                          8/28/96               $57.00            1,000

Michael Morris            8/1/96                $55.315           8,000
                          8/5/96                $57.44            4,000
                          8/12/96               $54.94            3,200

Kenneth M. Oshman         8/22/96               $55.00           15,000
                          8/23/96               $55.00           10,000
                          8/23/96               $55.00            5,000

Frank Pinto               8/29/96               $56.34           11,000

William Raduchel          8/14/96               $55.5313         10,000
                          8/14/96               $55.325          10,000
                          8/14/96               $56.0728         39,500

George Reyes              8/28/96               $55.94            5,000
                          8/28/96               $56.125           4,000

Janpieter Scheerder       7/29/96               $52.94            4,000
                          8/2/96                $57.19            6,000
                          8/9/96                $55.815           6,600
                          8/12/96               $55.19           12,000
                          8/15/96               $55.503          12,000
                          8/29/96               $56.19            3,600

Eric Schmidt              8/29/96               $56.125           5,000
                          8/30/96               $54.375           5,000

Edward Zander             8/28/96               $56.0625          5,000


                                       13

<PAGE>


ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

  a) EXHIBITS

           3.3        Registrant's   Amended   and   Restated   Certificate   of
                      Incorporation (as amended to date)

          10.87       Promissory Note between the Registrant  and Alan E. Baratz
                      dated October 4, 1996.

          10.88       Form of Idemnification Agreement

          11.0        Statement re: Computation of Earnings Per Share

          27.0        Financial data for the period ended September 29, 1996



  b) REPORTS ON FORM 8-K

     No reports on Form 8-K were filed during the quarter  ended  September  29,
1996.


                                       14

<PAGE>


                                   SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                   SUN MICROSYSTEMS, INC.



                                   BY

                                      /s/    Michael E. Lehman
                                      ------------------------
                                      Michael E. Lehman
                                      Vice President and Chief Financial Officer



                                      /s/     George Reyes
                                      --------------------
                                      George Reyes
                                      Vice President and Corporate Controller,
                                      Chief Accounting Officer



Dated:   November 13, 1996


                                       15

<PAGE>







                               EXHIBITS TO REPORT
                                  ON FORM 10-Q
                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 29, 1996






                                       16

<PAGE>


                             SUN MICROSYSTEMS, INC.
             CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS PER SHARE
                                   (unaudited)
                    (in thousands, except per share amounts)

FULLY DILUTED


                                                        Three Months Ended,
                                                    ---------------------------
                                                    September 29,    October 1,
                                                        1996            1995
                                                      --------        --------
  Net income                                          $123,390        $ 84,696
                                                      ========        ========

  Weighted average common
  shares outstanding                                  183,557          189,896

  Common - equivalent shares
  attributable to stock options and warrants           12,106          9,780
                                                      ---------       ---------

  Total common and common -
  equivalent shares outstanding                       195,663         199,676
                                                      =======        ========

  Net income per common and
  common - equivalent share                           $0.63          $  0.42
                                                      =====          =======