MESSAGE
| DATE | 2003-10-02 |
| FROM | Ruben I Safir
|
| SUBJECT | Re: [hangout] Merrill to Sun: 'Cut and Focus' or Be Acquired
|
My understanding is that Sun has $5,000,000,000 in cash, and THEN their
other assetts. They can do do this for another 10 years, and then buy
a small automobile or pharmacuetical company.
(or start a bank)
Sun still has a client base. They do need to make major changes, but
I can't see how they can be 'loosing talent'. Shit, let them hire Billy Donahue,
David Sugar, Tim Wilcox and Richard Stallman.
This IS a recession.
Think that Donald Becker can use some money? Bet on it.
Ruben
On 2003.10.02 18:45 "Inker, Evan" wrote:
>
> October 2, 2003
> Merrill to Sun: 'Cut and Focus' or Be Acquired
> By Erin Joyce
>
>
> A prominent technology analyst for Merrill Lynch is urging Sun Microsystems
> (Quote, Chart) to slash as much as 15 percent of its workforce and focus on
> being a niche player in mission-critical computing -- or risk joining the
> "carcasses" of formerly-great companies DEC and Data General at the bottom
> of a tech "ravine."
>
> In an open letter to Sun's chief executive Scott McNealy urging the
> company's board to take action, Steven Milunovich wrote that "Sun faces a
> crisis. It's necessary to cut expenses to assure profitability and narrow
> the product focus to reestablish a clear value proposition."
>
> If the company stays on its current course, the note continued, "we believe
> Sun is likely to suffer further share and financial losses, become
> irrelevant to most users, and eventually be acquired for its installed
> base."
>
> The research note comes on the heels of a warning by Sun on Monday that it
> would have to report an even bigger loss -- between 7 and 10 cents per share
> -- than it expected in the most recent quarter. Analysts were expecting a
> loss of about 2 cents per share. The news drove down Sun's price the next
> day by as much as 15 percent.
>
> Following the Merrill Lynch research note Thursday, which contained the open
> letter to the company, Sun's shares were off by as much as 3 percent to
> $3.16 during the midday trading session.
>
> Despite a concerted effort to expand its support for Linux across more of
> its product lines, the systems vendor still finds itself on the defensive
> about its support for Linux in relation to its high-end Solaris operating
> system, while trying to withstand intensifying competition from IBM and HP
> and a tech recession that has wrought two years of declining revenues at
> Sun.
>
> The Merrill Lynch note urged the Santa Clara, Calif., company to drop some
> product lines and cut its costs by reducing headcount between 5,000 and
> 7,000. It also urged Sun to "focus on creating mission-critical computing
> systems where it can add value through innovation.
>
> "That includes operating systems (Solaris, Orion), system architecture
> (blades), systems management (N1), and services," it said.
>
> "Solaris is critical to why users like Sun. Being late to Linux is
> unforgivable both because Linux is a kissing cousin to Unix and because
> Linux is a disruptive threat to Microsoft.
>
> Sun needs to convince users that Linux is a subset of Solaris and push two
> messages: (1) if you're doing Linux, go to the Unix expert, and (2) use
> Linux on the edge, but when you need mission-critical capability it's time
> to graduate to Solaris. Linux is not associated with Sun, so at this point
> the best Sun can do is make clear it aggressively supports Linux."
>
> Michael Hakkert, director of communications for Sun, said while the company
> is in a quiet period ahead of its next earnings release, Sun "welcomes Steve
> [Milunovich] to visit the company, meet with executives" and hear more about
> how it is "driving back to profitability."
>
> Namely, Hakkert pointed to Sun's fiscal 2003 results, which showed that Sun
> improved its margins by close to 5 percent on servers, and 1.9 percent in
> services, while cutting $477 million from its administrative and overhead
> costs during the year.
>
> The note also said it was "tempted to advise giving up on middleware, but
> the sedimentation trend of middleware moving into the OS [operating system]
> and the disruptive pricing of Orion (Java Development System) may be a hand
> worth playing though the selling model is unclear. Sun has made strides in
> improving its maintenance contract attach rates but may need to invest more
> in consulting/systems integration (though we don't see a major
> acquisition)."
>
> It also urged the company to de-emphasize its SPARC processor system and
> save the roughly $200 million to $300 million that Sun spends on research
> and development for the processor systems.
>
> "At the same time, Sun can't just dump SPARC outright given the size of the
> installed base and importance of migration paths," Milunovich wrote.
> "Customers must be assured that there will be multiple generations of SPARC
> to support their needs, especially high-end customers, much as HP has had to
> do with PA-RISC. The pure Solaris/SPARC story would be gone, but it already
> is."
>
> The note was also hard-hitting about Sun's Java strategy, urging the company
> to spin off its Java division, asserting that "Java has been a technology
> success, a so-so branding effort, and a financial failure."
>
> The note apparently kept its powder dry for perhaps the hardest-hitting
> suggestions to "bring in a COO" and to "Give Scott a makeover," referring to
> McNealy, also one of the company's founders.
>
> "Scott's brash and contrarian personality have been synonymous with the
> company's image and success. Unfortunately, the act is getting old,"
> Milunovich wrote. "Sun does need to make contrarian bets but must do so in
> ways palatable to conservative CIOs. Sending a clear message with a more
> pragmatic tone could help. More (some) respect for the competition and for
> different viewpoints is needed. In addition, Scott should not be the only
> face of Sun (we consider the brilliant Jonathan Schwartz cut from the same
> cloth), which is why a strong COO could balance yin with yang."
>
> The note urged Sun to "return to its roots while looking to the future." Sun
> is an innovator, it continued, "but even IBM became selective about its R&D
> efforts when the red ink flowed." [Sun's]Solaris, Linux, Orion, Mad Hatter,
> N1, SPARC, x86, storage, Java-'The Network is the Computer' tent is bursting
> at the seams," he wrote of some of Sun's main product and services lines.
>
> Hakkert declined comment on the suggestions, but stressed that "Sun is
> focused on executing on its strategies," with a strong management team in
> place and a pipeline filled with new products and aggressive pricing models
> for both high-end and lower-priced Intel-based server systems. In addition,
> Sun has reduced corporate spending, paid down $200 million in debt and ended
> the year with $5.7 billion in cash and securities, while working its way
> back to profitability.
>
> But Milunovich wrote that a large installed base of customers and strong
> balance sheet will only act as brakes on a slippery slope to the bottom of
> [a] ravine filled with carcasses such as DEC, Data General, Compaq, and
> others."
>
> "We have an open invite for Steve to come to talk with us" about the
> company's focus, Hakkert added. Sun will release its earnings for its fiscal
> first quarter of 2004 on October 16th.
>
>
> ****************************************************************************
> This message contains confidential information and is intended only
> for the individual or entity named. If you are not the named addressee
> you should not disseminate, distribute or copy this e-mail.
> Please notify the sender immediately by e-mail if you have received
> this e-mail by mistake and delete this e-mail from your system.
> E-mail transmission cannot be guaranteed to be secure or error-free
> as information could be intercepted, corrupted, lost, destroyed, arrive
> late or incomplete, or contain viruses. The sender therefore does not
> accept liability for any errors or omissions in the contents of this
> message which arise as a result of e-mail transmission.
> If verification is required please request a hard-copy version.
> This message is provided for informational purposes and should not
> be construed as an invitation or offer to buy or sell any securities or
> related financial instruments.
> GAM operates in many jurisdictions and is
> regulated or licensed in those jurisdictions as required.
> ****************************************************************************
>
> ____________________________
> NYLXS: New Yorker Free Software Users Scene
> Fair Use -
> because it's either fair use or useless....
> NYLXS is a trademark of NYLXS, Inc
>
--
__________________________
Brooklyn Linux Solutions
__________________________
DRM is THEFT - We are the STAKEHOLDERS http://fairuse.nylxs.com
http://www.mrbrklyn.com - Consulting
http://www.inns.net <-- Happy Clients
http://www.nylxs.com - Leadership Development in Free Software
http://www2.mrbrklyn.com/resources - Unpublished Archive or stories and articles from around the net
http://www2.mrbrklyn.com/downtown.html - See the New Downtown Brooklyn....
1-718-382-0585
____________________________
NYLXS: New Yorker Free Software Users Scene
Fair Use -
because it's either fair use or useless....
NYLXS is a trademark of NYLXS, Inc
|
|
