“With falling revenue, problematic acquisitions, product slips and a stock that has lost three-quarters of its value in the last year, Sun Microsystems is finding that Wall Street is losing patience,” Ashlee Vance reports for The New York Times.
“For its first quarter, ended Sept. 28, Sun reported a net loss of $1.68 billion, or $2.24 a share, compared to net income of $89 million, or 10 cents a share, in the same period last year. The loss includes a $1.45 billion charge to write down the value of past acquisitions and a $63 million restructuring charge,” Vance reports. “The company’s revenue dropped 7 percent, to $2.99 billion, from $3.22 billion in last year’s first quarter.”
“Sun’s servers and Java software are the driving force behind many Web sites and business operations. But in recent years, Sun has struggled to adapt as customers gravitated away from its high-end machines that use custom software and processors to cheap computers powered by commodity parts and free, open-source software,” Vance reports. “Sun’s bets on new server and storage systems, new processors and its own open-source software have not come through as fast as the company had hoped.”
“Sun moved Thursday to placate Wall Street by disclosing more information than usual about its various product lines, showing strong growth with some of its more radical server designs and traditionally slow-selling storage products. It also hinted at impending layoffs,” Vance reports. “It is unclear if that is enough to satisfy some of Sun’s largest investors. ‘They need to cut,’ said Chris Whitmore, an analyst with Deutsche Bank.”
“Over the last few months, Southeastern Asset Management, a Memphis investment firm run by O. Mason Hawkins, has acquired more than 20 percent of the company. Southeastern has said it expects to actively engage in discussions with Sun’s management and third parties about the company’s future,” Vance reports.
“Last November, Sun tried to polish its image through a one-for-four reverse stock split. Over the last 11 months, Sun shares have tumbled to pre-split prices,” Vance reports. “Sun remains a cash machine, however, taking in more than $1 billion during its last fiscal year… Morale inside Sun, long a favored bastion of top engineers, is sagging, according to current and former employees. The company has endured a number of large layoffs in recent years, although the company still employs about 33,000 people.”
More in the full article here.
[Thanks to MacDailyNews Reader “HueyLong” for the heads up.]
MacDailyNews Note: Sun Microsystems’ (JAVA) market cap currently stands at $3.65 billion.
For all it’s ups and downs, Sun is a pretty cool company, I hope they get through this.
3.65B? that’s a bargain, where’s my check book?
Could be a Trojan Horse for Apple for large enterprise clients. The installed based of Sun is an interesting opportunity to access IT acceptance from a server and storage side.
Also, if Apple is controling Java, imagine the impact on all web sites and server around the world. Let’s say that Apple release a special version of Java for Mac OS X Server that leverage Snow Leopard (Core animation, OpenGL, Open CL, …). Apple can benefit from lots of enterprises that will migrate their servers to leverage the new Java functionalities.
I have said this years ago, but Apple should acquire Sun and incorporate the enterprise hardware into OS X Server.
It may be a good time for a Sun takeover but Apple is the wrong company to do it. Reworking OSX into an enterprise-targeted OS is the wrong design strategy, and maintaining OSX alongside Solaris will fragment resources and result in major customer confusion. Apple’s corporate strength is its focus on the end-user experience and they should not make the mistake of refocusing on high-end computing and risk ending up with a ridiculously complex OS (Microsoft’s mistake). As for Java, Apple has already decided that Java is not their future and they should stick with that decision. A final point is that the crucial component of retaining enterprise customers is a quality support organization, and Sun’s dirty not-so-secret is that their support organization is awful.
Google would be a far better fit with Sun, in that Google’s strength is their lack of focus, and due to that strategy they have a constant need for the best engineers. Besides, Android is heavily reliant on Java and Google needs to demonstrate a serious commitment to Android.
Is Java all that compelling a reason to buy Sun…
Are there enough real assests…
i concur with wannabe
Lots of real good technologies to grag there! Say it since 2 years: Apple MUST by SUN! APPLE + PA Semi + SUN = monster servers and tremendous kick in M$’s ass…umption!
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Reasons why Apple should acquire Sun Microsystems:
1. Java (control one of the most popular and most used programming language. Improve Java to work better with their WebObjects web application server)
2. ZFS (advance file system that could be incorporated into OS X)
3. Solaris (cool stuff from Solaris could be used in OS X. Remember NeXT?)
4. Enterprise Server Business (To capture the enterprise market and also build their cloud computing solution)
5. SPARC processors (technologies from this could be used by their PA Semi team to build Apple’s own processors)
6. StarOffice (incorporate advance features from StarOffice into iWorks)
7. xVM VirtualBox (Virtualization technologies from Sun xVM VirtualBox could be incorporated natively into OS X to be able to run Windows application thus rendering Windows completely irrelevant.
Anyone else remember back in the mid 1990’s when all the “experts” said that Sun should buy Apple?
Even then, Apple’s sales were twice Sun’s.
They do not have much to offer Apple. However if I was in charge of MS I would buy Sun and release Solaris + Win32 compatability box (WIndows Classic) as Windows 7 instead of the Vista Redux.
Sun and Apple do have more compatible corporate cultures then most other companies. Sun could expand Apple’s UNIX OS and Application Engineering depths. Sun also has the SPARC Processors and with Apple’s PA Semi engineers and Sun’s Chip Engineers the possibilities for Ultra Small, Ultra Low Power, Ultra Fast Mobile processors and High-end Mega Server Processors.
Then their is JAVA and the Enterprise IT server “Big Iron” credibility Sun has.
The Question is how much if any of Sun does Apple want? And how much of Sun would Apple keep running if they bought Sun?
Anon.. Excellent list!
Apple has the dough. It would make sense and certainly strengthen Apple in the server department.
Java? A no-brainer there.
ZFS is coming to Snow Leopard!
VirtualBox could use some interface help from Apple’s programmers, too. I’ve used it a bit and it’s nice to be able install Windows on and EXTERNAL drive.
Oh no a Snapple flashback!
I am bored. Just do it already. I need some Apple excitement in my life.
Now if Sun offered the Cloud in addition to Cloud hardware for others… If there is one area that Sun is good for and we trust them for it is Cloud computing.
Sun Azure?
Yawwn!
@ MDN, the same site that stated that Adobe would be bought by Apple. Still waiting….
Java…write once, debug everywhere.
Sun is a modern day Bell Labs, and their patent portfolio and technologies are incredibly extensive. At this point Apple and Sun would not be a good fit. In fact, I can only think of one company that would be a good fit for Sun–if the Department of Justice would allow it. That would be IBM. The do have some overlapping hardware lines but IBM has a huge Java investment. Solaris would be a great replacement for AIX. And yes, there is a PowerPC port of Solaris. It’s old at this point but it wouldn’t take that much effort to get it to work on modern Power chips.
*Someone* will buy Sun. They’re way too valuable to be allowed to fail.
As long as Microsoft doesn’t buy it….
If they do, I’d be taking anti-depressants for at least 10 years….
Why would Apple want to buy a company that is failing? If they don’t have compelling products that keep their own ship afloat, why would Apple want them? Could they really add much value to Apple?
There are some possible positives for Apple purchase of Sun, but the biggest, in my view, is defensive… to block Dell.
Dell could buy Sun. Sun gives Dell entrance into the big iron market, which could help them in enterprise sales against HP and IBM. But most importantly, Dell would get Solaris, Java, ZFS, and a big group of programmers. They could then duplicate Apple’s experience with NEXT and write their own UI front end for Solaris. This new Dell OS would be much better than Windows and arguably even better than Mac OS (at least at its base). The Unix underpinnings of Solaris could mean popular software now working on the Mac’s unix base could be ported to the Dell OS. Dell would be free of Microsoft and by licensing the Dell OS with a near Mac-quality UI could become Microsoft’s worse nightmare while slowing the Apple juggernaut.
Apple should buy Sun, take their cash, sell their real estate, keep any IP worth having, and sell the rest. Apple would end up with a slight profit and stop Dell from becoming a real threat in the future. Dell OS could probably beat Windows 7 to market. Dell OS would instantly have significant market share (greater than Apple), especially if they include a compatibility box app like Wine for windows apps to bridge a gap of a few years, after which MS would become irrelevant.
My Little Pony.
When you have a company with some great intellectual property and some brilliant people run by a self-important ponytailed twit like Jonathan Schwartz, you have trouble. The fact is that Sun, while it has some great assets, is also a company with a losing business model. When it comes to server rooms, IT Nazis want it fast, ugly and cheap. While Solaris has been a good OS, Linux and (gag) Windows Server win out.
Apple might be better to wait and buy select assets of Sun, rather than buy the company outright. I’m very concerned that a big acquisition like this would only poison the culture that is Apple. Besides, historically, Apple makes small acquisitions that yield a significant ROI. Good as some assets and people may be at Sun, I am not convinced that a big acquisition would return benefits.
Sad to say, the Sun is setting. Fast.
Apple should buy Sun, if not just for certain patent rights and keeping Google in line. Actually, the real reason we want the Apple crop in the Sun is because of what MegaMe said.
1. Java
Not a feature. Java got Sun a lot of attention, but who actually paid them for it?
2. ZFS (advance file system that could be incorporated into OS X)
Already got it, don’t have to fork over $3.4 billion for it. Apple already has some of the key ZFS developers, and they can hire any others they want as Sun collapses.
3. Solaris (cool stuff from Solaris could be used in OS X. Remember NeXT?)
Two words: patch hell. Apple’s already got a superior UNIX implementation.
4. Enterprise Server Business
If Apple wanted to be in that line of work, they could exceed Sun’s offerings again, for far less than $3.4 billion. FYI, when Apple decided to get out of the storage business, they were the #3 vendor in that field.
A decade ago, Sun had a world-class enterprise sales force and professional services group. Today, most of those guys have long since fled to HP, IBM and EDS.
5. SPARC processors
Ten years ago this might have mattered, but SPARC is basically an end-of-life technology at this point.
6. StarOffice (incorporate advance features from StarOffice into iWorks)
God forbid. Have you actually tried StarOffice? All the visual elegance of OpenLook.
7. xVM VirtualBox (Virtualization technologies)
If Apple wanted to run Windows apps, they could install WINE, for (all together now) far less than $3.4 billion.
Every time someone proposes that “Apple should buy (insert failing company of the week here)”, they always leave out the cost of Apple’s management time to deal with integrating the newly-acquired company. Sun’s got a lot of deadwood, starting with Schwartz. Shaping up Sun’s management is a Herculean task (think stables), and it’s just not worth it, even if they could buy Sun for a dollar.
-jcr