Thursday, September 23, 2010

". Com" dignity in SUN about to fall of?



Recent days, Sun some precarious.

October, Sun announced the company's first quarter filing shows operating income compared to last year fell by 7%, a substantial first-quarter loss of 1.68 billion U.S. dollars, last year out of the loss of the Sun once again doom and gloom.

The financial crisis strikes, it is seriously diminished the market value for Sun, as of November 15 closing, Sun's stock has dropped to 4.12 U.S. dollars per share, below the market value of billions of dollars; and last year, Sun's share price also Wandering up and down in the 20 U.S. dollars.

Analysts and industry speculation and therefore, Sun will become a takeover target, the potential buyers would include its old rival in the server market, IBM, HP, etc..

Although the November 18, Sun's Chairman Scott McNealy at the Developer Conference held in Beijing, "Sun 2008 Technology Day" event made it clear that: "Sun currently have 30 billion in cash reserves, the winter is not a problem." However, the industry on "Sun will Fall" and rumors are still getting louder and louder.

Clouded

Familiar with Sun's people know, Sun's various hardware and software technologies, such as the UltraSPARC chip, Solaris OS, Java, MySQL open source database server system and a series of operations to Sun to become a major IT company in history.

But in recent years, Sun's performance was applauded for its people can not. As of September 28 in the Sun first quarter earnings, the company's revenue 2.99 billion U.S. dollars, with 3.22 billion U.S. dollars last year compared to the same period, down 7%, a net loss of 1.68 billion U.S. dollars.

Sun, Sun CEO Jonathan I. Schwartz to poor performance in the quarter, attributed to the impact of the financial crisis: "Like our customers, as the global economic recession, Sun also is in the process of a slowdown . "in an investor conference, Schwartz said, especially in North America, as had always been an important source of revenue for Sun's financial services clients reduce costs, Sun's revenue fell 20%.

In addition, the report also showed, Sun 16.8 million loss mainly from two parts - due to the acquisition generated 1.45 billion U.S. dollars and 630 million in restructuring charges.

Some analysts said the Sun in 2005 to spend 4.1 billion acquisition of StorageTek is Sun14.5 100 million U.S. dollars of major non-cash expenses. In addition, in recent years, Sun has acquired MySQL is sick for the observers denounced the deal - MySQL in 2007 only 50 million U.S. dollars in revenue, while Sun has spent 10 billion dollars to buy it.

Although in the past three years, Sun through 3 layoffs and restructuring, to win for themselves some breathing space, but the decrease in revenue, would be unwise to buy the product decline, and stocks continued to slump, has begun to Wall Street Sun lost patience. However, Sun announced a new financial report for the same time, Sun still do not see any change in the strategic plan.

Buy into a quagmire

The huge losses and growing pressure from the financial crisis, on November 15, Sun layoffs the company issued a statement saying, in order to save costs, will lay off 5000 worldwide, 6,000 employees, of its global workforce by 15%. It is reported that Sun, which will reduce 700 million per year to 8 billion dollars in spending.

Meanwhile, Sun also announced that the software business will be reorganized and consolidated through the department to open up other business. Among them, the Application Platform Division, responsible for Java, MySQL, GlassFish application server, Sun Learning Services business; System Platform Division, responsible for Solaris virtualization and systems management software business; the cloud computing division is mainly responsible Network.com website, NetBeans development platform, StarOffice productivity suite and other business.

Schwartz said that re-development for low-end Sun servers and Sun hardware and software products to connect storage applications bring thrust. Meanwhile, the new corporate structure will further promote those who are already using Sun's open source software, businesses and government agencies to buy Sun's systems, such as the MySQL database. Currently, Sun is charged to implement the main mode of operation and maintenance costs, the software for free.

However, "Sun bet on this new server and storage systems would not be wise." To the trade.

First of all, Sun is too easy to give up the hardware business, and turn to software and systems. Look, Sun is to be transformed into enterprises like IBM, but unfortunately, it does not have a sound system as IBM, and good government relations;

Second, Sun's software system is not its strong point. Although it has a software Java, but in fact, in the Java development history, its contribution to Java than to IBM;

Third, Sun has been committed to open source though, and the open source development as one of the most important, but, in Sun's financial statements, has failed to reflect the Sun's charm.

"Now, competitors and investors are very concerned about the short Sun's stock price low." Southeastern Asset Management, said Jason E. Dunn, vice president.

Therefore, many analysts pointed out that the current situation to Sun, it is highly likely to be another company. ESG analyst Brian Babinea said, Sun should be split to sell some of the business, keep those relatively high profitability sectors, IBM is the potential buyers. 451 Group analyst Lyman thinks, Sun high-end server business should be sold to Hewlett-Packard or Fujitsu.

A chance to open source

November 18, at Developer Conference held in Beijing, "Sun 2008 Technology Day", Sun's "head of" Scott McNealy official countered, "the sun will soon fell" rumors. "Sun will never be bought nor sold any of the Company of a business or product line." McNealy said, has always been outspoken.

Although the impact of the financial crisis, Sun's business and income, but McNealy said, "Sun 20 years the company has accumulated 30 million in cash flow, can resist the financial crisis."

In addition, McNealy also emphasized that the financial crisis is precisely the open-source opportunity. Economic good times, the user may not care about the cost of non-open source technologies. However, in economically difficult times, know-how of the users, "opt-out cost" only go higher. Therefore, enough to help businesses reduce costs and increase profits of open source will definitely become a trend.

China is the source of the most important emerging markets, McNealy also noted: "China should have extensive use in various fields, open source technology, which is conducive to business continuity, but also for governments and enterprises to provide more effective security Security. "

Link: stubborn Sun

"McNealy is a stubborn man." McNealy met with the press of each such evaluation will be the head of Sun's. His bold remarks directly, he found the direction, it seems that no one can change. Each have seen the press McNealy also said that he is a very appealing speaker.

In this has a "Silicon Valley fighter," said the leader, led, Sun how much the company is also infected with McNealy's stubborn temperament. Many years ago it made "open source strategy," but until the last two years, Sun's open source and has gradually been accepted; its acquisition by many experts as "trading losses", but it still insists StorageTek and MySQL with a high price to the bag. McNealy's Sun has also adhere to the famous phrase: "not just parroting great wisdom."

However, in commercial areas and a "stubborn fighter" is not necessarily a good thing. In the face of adversity, tough can withstand the pressure of an enterprise, in the Code have been Yunkai praise the day as the quality, but it must be established to seize future opportunities in the business premise.

However, Sun is now the world has changed, ". Com era" is over. McNealy's stubborn, so that Sun ignores server standardization trend in the high-end servers and came a cropper; he stubbornly refused to Wall Street analysts and fight shoulder to shoulder in the Sun and its former CEO Edward Zander's recommendations. Sun and McNealy's stubbornness has become blind. If you continue like this, "fighters" will probably end up ultimately tragic ending.







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