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Sun Microsystems (NASDAQ: JAVA) has been on a wild ride in recent years. The company has been battered in the corporate space as cheaper hardware and operating system alternatives (like Linux) cropped up and stole profitable market share from the Silicon Valley stalwart. When company founder Scott McNealy handed the reins over to then-CEO Jonathan Schwartz, many investors did not know what to think. By now, they probably do.Sun has delivered profitability for three straight quarters after making its once-proprietary Solaris operating system an open-source product, and it's mirrored a good deal of IBM's move to a revenue model built on services instead of software and hardware. With computer server hardware still rapidly moving into the commodity stage (if it's not there already), this move could not have come any sooner for Sun. Schwartz knew it, and acted in time.
Schwartz presented Sun's plans for cost initiatives and growth plans for the new fiscal year early this morning in New York City while many investors and Sun pundits watched and listened with a careful and scrutinizing eye (and ear). With Sun shares up over 6.5% in just the last week, what was the chatter from today's announcement? The meeting began at 8am EST today, and transcripts and audio downloads are available here.
Sun has an avid following in the corporate server market and it's not going anywhere soon -- but that doesn't guarantee growth consistently, quarter after quarter. And, that's what the market (unfortunately) wants and needs. That being said, the biggest two components from Schwartz's presentation this morning rest on disk (and tape, oddly) storage growth and increasing the adoption of Solaris. Sounds boring, but it's not for Sun. For fiscal 2009, Sun has a decent chunk of work to do on both those fronts to see consistent quarterly growth, but by far the more important piece of this is getting more customers using Solaris, and buying service contracts from Sun at the same time.
Will Sun see more upside soon based on a somewhat shaky future plan for its upcoming year, or will it ride the tide of rising tech stock prices without regard to its own plans? Right now, Sun is holding on to global market share in the age of commodity hardware and its change to open-source operating system software, but not enough history has gone by to see if this strategy will work long term.
Will Sun see more upside soon based on a somewhat shaky future plan for its upcoming year, or will it ride the tide of rising tech stock prices without regard to its own plans? Right now, Sun is holding on to global market share in the age of commodity hardware and its change to open-source operating system software, but not enough history has gone by to see if this strategy will work long term.
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