Close
  • Latest News
  • Big Data and Analytics
  • Cloud
  • Networking
  • Cybersecurity
  • Applications
  • IT Management
  • Storage
  • Sponsored
  • Mobile
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
Read Down
Sign in
Close
Welcome!Log into your account
Forgot your password?
Read Down
Password recovery
Recover your password
Close
Search
Logo
Logo
  • Latest News
  • Big Data and Analytics
  • Cloud
  • Networking
  • Cybersecurity
  • Applications
  • IT Management
  • Storage
  • Sponsored
  • Mobile
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
More
    Home Latest News
    • Networking
    • Servers

    Pressure on Sun Rises as Earnings Continue Slide

    By
    Matthew Hicks
    -
    April 15, 2004
    Share
    Facebook
    Twitter
    Linkedin

      After posting another quarter of poor earnings, Sun Microsystems Inc. faces more pressure than ever from both shareholders and IT customers to prove that it can recover the position it once held as a prospering computer company, technology analysts said on Thursday.

      While Sun has begun taking many of the right strategic and business operations steps to recover from its slump, analysts said the Santa Clara, Calif., company still must prove that such changes as greater support for x86-based systems and the settling of its long-standing feuds with Microsoft Corp. can improve its financial picture. On Thursday, the company posted a loss of $760 million for its fiscal third quarter on revenues of $2.65 billion.

      “The bottom line is, wherever it comes from, Suns running out of time to prove that [it] can make money,” said Gordon Haff, a senior analyst at Illuminata Inc., of Nashua, N.H. “They havent run out of time yet, but there is a recovery going on and others companies are doing better, but Sun is not.”

      Analysts agreed that Sun, despite growing financial losses, is far from bankruptcy or insolvency. The company has billions in cash and has taken steps to shore up business. The biggest was its $1.6 billion settlement of antitrust and patent issues with Microsoft, an agreement reached earlier this month that included plans for the two companies to collaborate on technology.

      “Sun and its product lines will be around for a long time no matter what happens to Sun as a corporation,” said Dana Gardner, a senior analyst at The Yankee Group, in Boston. “Sun might have to shrink and reconstitute itself, but theres not too much risk of it going away.”

      /zimages/2/28571.gifClick here to read an interview with Sun President and Chief Operating Officer Jonathan Schwartz about the Microsoft deal.

      To Gardner, Suns decision to work with Microsoft could allow the two companies to battle the momentum of the Linux operating system, particularly as it gains ground in the same enterprise data centers where Sun wants its Solaris operating system. He expects Sun and Microsoft to work together on more streamlined version of Solaris and Windows for the data center to thwart Linux.

      “I see a lot of signs that Sun is being bold in its thinking and addressing its structural issues and exploiting the changing and dynamic IT landscape,” he said.

      Sun has not stayed away from management shake-ups. As part of its earnings news, it reshuffled top management that are reporting to Jonathan Schwartz, the right-hand man of chairman and CEO Scott McNealy, who was promoted to president and chief operating officer earlier in April. One of the executives leaving Sun is Neil Knox, executive vice president of volume systems products, who had led much of Suns efforts into supporting systems running x86 processors from Intel Corp. and Advanced Micro Devices Inc.

      /zimages/2/28571.gifTo read more about Suns work with AMD, click here.

      Chief Technology Officer John Fowler will take over the part of the lower-end server business that uses x86 processors. While Fowler is well-suited to take on the role, the shift still could cause some disruptions, Haff said.

      “By all appearances (Knox) has done a very good job for them,” Haff said. “I see Knoxs departure as a significant negative.”

      Along with the management changes, the other major restructuring came from Suns decision to shift its UltraSPARC roadmap, said Jean Bozman, an IDC research vice president.

      Sun plans to cancel development of the UltraSPARC V processor and jump to a new technology called “chip-level multithreading” following next years planned launch of UltraSPARC IV+, Bozman said. The change in chip plans was a likely casualty of the need to cut development projects.

      “In the end it was a decision about how many projects you can run and still restructure company and reduce overhead and R&D costs,” Bozman said.

      /zimages/2/28571.gifRead more here about Suns plans for UltraSPARC.

      For enterprise IT managers, Suns continued losses and major shift do cause pause when they are considering whether to start new relationships with the vendor, Haff said. Sun needs to show recovering financial results within the next fiscal year, or even sooner, he said. Suns fiscal year ends on June 30.

      Shares of Sun stock on Thursday close down 3 percent at $4.42 per share. Gardner said the biggest impact of Suns sustained financial doldrums could be the outcome of a continued drop in its stock price.

      “If the stock goes down quite a bit more, then it becomes a takeover target,” he said.

      And a potential suitor could shake things up even more.

      /zimages/2/28571.gifCheck out eWEEK.coms Server and Networking Center at http://servers.eweek.com for the latest news, views and analysis on servers, switches and networking protocols for the enterprise and small businesses.

      Matthew Hicks
      As an online reporter for eWEEK.com, Matt Hicks covers the fast-changing developments in Internet technologies. His coverage includes the growing field of Web conferencing software and services. With eight years as a business and technology journalist, Matt has gained insight into the market strategies of IT vendors as well as the needs of enterprise IT managers. He joined Ziff Davis in 1999 as a staff writer for the former Strategies section of eWEEK, where he wrote in-depth features about corporate strategies for e-business and enterprise software. In 2002, he moved to the News department at the magazine as a senior writer specializing in coverage of database software and enterprise networking. Later that year Matt started a yearlong fellowship in Washington, DC, after being awarded an American Political Science Association Congressional Fellowship for Journalist. As a fellow, he spent nine months working on policy issues, including technology policy, in for a Member of the U.S. House of Representatives. He rejoined Ziff Davis in August 2003 as a reporter dedicated to online coverage for eWEEK.com. Along with Web conferencing, he follows search engines, Web browsers, speech technology and the Internet domain-naming system.

      MOST POPULAR ARTICLES

      Cybersecurity

      Visa’s Michael Jabbara on Cybersecurity and Digital...

      James Maguire - May 17, 2022 0
      I spoke with Michael Jabbara, VP and Global Head of Fraud Services at Visa, about the cybersecurity technology used to ensure the safe transfer...
      Read more
      Cloud

      Yotascale CEO Asim Razzaq on Controlling Multicloud...

      James Maguire - May 5, 2022 0
      Asim Razzaq, CEO of Yotascale, provides guidance on understanding—and containing—the complex cost structure of multicloud computing. Among the topics we covered:  As you survey the...
      Read more
      Big Data and Analytics

      GoodData CEO Roman Stanek on Business Intelligence...

      James Maguire - May 4, 2022 0
      I spoke with Roman Stanek, CEO of GoodData, about business intelligence, data as a service, and the frustration that many executives have with data...
      Read more
      IT Management

      Intuit’s Nhung Ho on AI for the...

      James Maguire - May 13, 2022 0
      I spoke with Nhung Ho, Vice President of AI at Intuit, about adoption of AI in the small and medium-sized business market, and how...
      Read more
      Android

      Samsung Galaxy XCover Pro: Durability for Tough...

      Chris Preimesberger - December 5, 2020 0
      Have you ever dropped your phone, winced and felt the pain as it hit the sidewalk? Either the screen splintered like a windshield being...
      Read more
      Logo

      eWeek has the latest technology news and analysis, buying guides, and product reviews for IT professionals and technology buyers. The site’s focus is on innovative solutions and covering in-depth technical content. eWeek stays on the cutting edge of technology news and IT trends through interviews and expert analysis. Gain insight from top innovators and thought leaders in the fields of IT, business, enterprise software, startups, and more.

      Facebook
      Linkedin
      RSS
      Twitter
      Youtube

      Advertisers

      Advertise with TechnologyAdvice on eWeek and our other IT-focused platforms.

      Advertise with Us

      Menu

      • About eWeek
      • Subscribe to our Newsletter
      • Latest News

      Our Brands

      • Privacy Policy
      • Terms
      • About
      • Contact
      • Advertise
      • Sitemap
      • California – Do Not Sell My Information

      Property of TechnologyAdvice.
      © 2021 TechnologyAdvice. All Rights Reserved

      Advertiser Disclosure: Some of the products that appear on this site are from companies from which TechnologyAdvice receives compensation. This compensation may impact how and where products appear on this site including, for example, the order in which they appear. TechnologyAdvice does not include all companies or all types of products available in the marketplace.

      ×