Other ticker symbols considered included WTF, OOPS and OUCH. In case you haven’t heard, My Little Pony announced yesterday that they’re going to lose buckets of money and take some huge charges related to some acquisitions. See their press release here. Of course the villain in all this is the economy. Not My Little Pony. Nope, he’s been doing a great job. Like paying $4.1 billion for StorageTek, an aging tape storage company. Or paying $1 billion for MySQL, a software company best known for giving its product away at no cost. Other smart moves by MLP include open-sourcing Sun’s software, so that it generates less revenue. Plus some keen window-dressing, like a one-for-four reverse stock split and a stock ticker name change to JAVA. Yep, the board is so happy with MLP that last year they paid him $11 million – up from $7.7 million the year before. MLP said in a statement that the company is “positioned to offer the kinds of products that can radically help customers reduce expenditures.” In other words, this downturn is actually gonna be good for us.
For what it’s worth, I happened to be visiting Sun just as the last downturn was beginning. This was for a big cover profile in Forbes which ran in January 2001. (You can see it here.) McNealy and Zander were running the place and they were as arrogant as any team I’d ever run into in tech. Here was Zander explaining why a downturn in the economy would be good for Sun:
“I think there’s going to be a shift in capital spending, and it’s going to be lucky for us,” Zander says. “I don’t care who you are—if you’re General Motors or Deutsche Telekom, you’re going to keep investing in Internet infrastructure and dot-comming your company, because that’s going to let you gain global advantage and be more competitive.”
McNealy has stepped aside and is now chairman. Zander went to Motorola, drove it into the weeds, and then left.
Brutal Dan. Sun seems less and less relevant every year. I don’t think JAVA is dead yet, but its sure being squeezed. It will be interesting to see if we have any of those nightmare mergers of desperation in the next five years. Any bets on who?
An Open Letter to Sun Microsystems:
The biggest problem I have witnessed at Sun having followed the company performance for the past decade is the seeming lack of common sense business management and the inability to take exceptional technical products and monetize them.
Consider the Sun Ray product which I saw at least five years ago. This product is basically a dumb terminal (thin…anorexic client) that over 100 million people in the US and many more globally (mostly business owners and their workers) could easily use. All of the applications and files can be hosted server side and users could pay a fee of let’s say $39.99 a month to access their files from any dub terminal. You could sell the hardware for $300-400 bucks or a little more for a bigger higher quality screen. So let’s do the math. $480 per year per user times 100 million users equals $4.8 billion in recurring retainer revenue plus the $4 billion or so in hardware sales.
Sun has consistently forgotten one very large customer segment, the end user. Remember the tagline you wrote “The Network is the Computer” the end user segment is where the money is for that strategy.
Apple is basically doing this now for music, media and voice (IPod, IPhone), but there is still an opportunity to do it for applications. Sun could eat Dell’s lunch for them. Cisco is doing it with WebEx but it is not a core business. Microsoft hasn’t pulled this off yet, Sun could do it for them. Sun could do this better than Google because of the quality of your OS and hardware. Sun could do it more securely than anyone.
Sun should immediately set up a 100 day task force of the best minds in the company to develop this strategy and market it to a select group of businesses with the goal of having it live for 100 clients at the end of 100 days. Then run a Super Bowl ad that shows the client going from New York to Chicago to LA to Shanghai to Dubai to London literally following the Sun rise. He would access the same simple screen to continue his workflow. End the spot with: The Network is the Computer. A New SUN is Rising.
It’s time to re-energize this company in a direction that has a future. Pontificating about technical superiority and trumpeting open source while giving away shareholder’s technology for free is the wrong direction. Management and the board have a fiduciary responsibility to take the company in a direction that maximizes shareholder value.
There is a huge opportunity ready to be seized. The only question is whether you have the courage to grab the gold ring.
Activist Investor
Wow. Nice. A re-energizing would be fantastic. I just wonder if anyone is listening to these new ideas, or do they really have something up their sleeve the rest of us are unaware of. But I did like your comment. Bold and focusing on something really important. Profit. Maybe you should be running a company and find out some things about your own ability to foment ideas and execute them to completion. Really. Peace.
@Activist
Time to start a shareholder revolt at Sun because these people will not follow your advice, they are incapable. Pick your team for the BOD, hire attorneys, white knights, angels, anyone, get started now, the sooner the better.
ALSO:Since Java has been GPL’d, it is no danger of dying out for a long long time, will probably evolve and work a helluva a lot better in long run.
Sun is the new Apple. Just wait until they warm up SunOS, add some animations to the GUI and try to sell it for 10x times the price. This will drive Apple’s marketshare into triple digits and the Sun will set for good. Akhenaten will leave Amarna. New Pharaoh will reign.
I read the article you linked to, Dan. Nice quote in there about how Enron has ‘committed to buying bazillions in Sun Servers, with no intention of slowing over the next 5 years’. A delayed-release punchline, to be sure.
Seriously, how many employee-shareholders can get their act together to find replacements for MLP and his constipated BOD? Are you gonna’ sit there commenting that the water is getting so hot I suppose we’ll be parboiled for long, yep, are leaders are terrible, gee, it’s hot – OR are you going to become pro-active and start a revolt?
Thought so!
Another Red Lobster special.
If they’re so smart, why are they and you still working for Sun? Even this guy flew the coop (the CEO is kinda’ smokin’!)
What SUN needs to do is to make a discreet, quality product that is relevant to an end user, and sell it. It’s pretty fucking simple.
The CEO is just looking to continue MILKING the Company of millions each year in executive compensation, and the board of directors is asleep at the switch.
It’s incompetence all around.
Activist Investor is right on the money. Unfortunately, SUN is not going to change its ways unless management and the board of directors are expunged, and that is unlikely to happen because it’s easier for any investor that cares to simply liquidate their shares and invest elsewhere.
hi
ty2tanbydjo3d3lp
good luck
hi
ty2tanbydjo3d3lp
good luck
very nice
ticker symbol?? Doh!
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