Sun Microsystems, Inc. (JAVA)

Sun Microsystems Inc. is a long term growth story.
Under the new CEO the company has been able to start a long process of rebuilding itself. The market crash of 2000, 2001,2002 left Sun in the Earth. Focusing on the client, cost cutting, R&D, Sun is building a company that in 5 years will command the attention of Wall Street. This is the story of Open Source winning the race like the Turtle and the Hare.

McNealey has managed through several large ups & downturns because SUN technology leads and then lags, and this is the longest lag. He is innovative and competitive & the Sun will rise again.

Almost going under gave SUN a good look at itself. They're now taking a more conservative growth path while leveraging there impressive IP. I like the Java software stack they have accumulated, and the use of Open Source code as a driver. They also have some interesting offerings in the remote, virtual, and partivcularly storage (ZFS) spaces that have had many of the kinks worked out and are now mature. (Sparc->Solaris->Java System Web Server->MySQL)

New focused management, bypassing Dell, killer new product line.

Sun Microsystems (SUN) is a producer of servers and storage products and provides computer services. SUN’s products include network servers, workstations, storage systems, and operating software. The company markets its products under Solaris, Sun Ray, and Java brand names.

The company in the past few years was constantly losing market share against industry giants, but recently it has stabilized and is seeing improvement. However, the pace seems to be slow. Further, SUN is expanding its focus and is increasing its exposure to software and storage through various acquisitions.

The fortunes of the company are tied to the mature and price-competitive high-end server market, which contributes the largest to its top-line. Further, there is intense competition as SUN competes with IBM and Dell who are fearsome in the high-end and low-end server market. Additionally, the company’s open-source strategy is a huge question mark. This is because open-source Linux enjoys a big head start and has a larger developer community and a stronger presence in enterprise data centers, as against SUN.

The company has recently announced various cost cutting measures in a move to increase its bottom-line. This includes shaving off a part of its workforce and closing facilities. This move will bring down its costs significantly. But, it will also pose problems for its management, as they will be left with fewer resources and a bit demoralized staff to work with.

On the flip side, SUN is expected to benefit from a $2.8 billion acquisition of StorageTek, a provider of data storage hardware where the company has petite presence. It is believed that this market is growing and StorageTek’s 1,000 strong sales force and esteemed technology will allow it to keep a hold over the market share. However, a few positives will not protect the stock and the negatives will head it towards a southward journey.

Sun is focusing attention from the CTO down on software services and training. In spite of the recent reduction in force, the estimate of a "one dollar invested in training returns over six" will draw investment there. The software sales force is also refocused, with new incentives for service and training contracts. Sun will continue to focus on improving product quality and user experience, which not only will attract more business but will improve the service contract margins.

SUNW's main revenue streams come from the sales of proprietary, expensive and high margin hardware. While they have some interesting initiatives (Java, StarOffice, Linux on AMD servers), they bulk of their revenue is going to dry up as CIOs and integrators choose open standards, less expensive and low margin hardware. Some will buy from SUNW, but most won't!

Throw in a share each of LVLT, SYMC, ORCL, and MSFT and I'll give you the $3.88. Maybe.

FOOL FORALL

Sun has good products (Java, Solaris, hardware, we'll see about JavaFX), but they're not really in a position to really benefit from them in part because none of them really dominate the competition. Their move to open source the Java and Solaris shows that they're getting a bit desperate.

I think that the coming slump is likely going to hit them harder than most.

Look at last quarter's report, Sun did a great job at cost cut, in the meantime, sun is working on increasing revenue. Those are good signs for a company. We will see sun goes back to $20 or more in the future.

Sun has not completed their turn around, but is making progress. With the cost of electricity rising and the cost of computing falling their systems are often less expensive than the competition.

Sun's unique software support pricing (per employee) provides organizations a reliable method of projecting future software costs. Since one cost provides access to nearly all of their software this is less expensive than any other method of support.

Their servers and PC's are great for Linix and Unix systems and also work well as print servers. You rarely if ever have to reboot a Sun system. They've also made their servers more energy efficient. Their restructuring should help them in the long run.

convention soon(oct). what will all these brilliant nerds unveil to destroy hp even more than whatshername did? they're too smart to be bad. plus, they are working with dod's darpa. probably giving birth to everyone's big brother, but a brother that eats more and more and more . [insert satchel paige quote here].

Although Sun is having a tough time now and will continue for a while; however, they have some really great new technology and seem solidly on the path to profitability. I think they'll make a comeback.

This company has hit bottom and has finally turned itself around with products it's customers will buy. With an excellent balance sheet, lots of cash, little debt, and the aforementioned new products I believe that there is no place to go but up. Hopefully way up.

Multiyear consolidation is comin' to its end, right?

Speculative call. have to throw in a contrary pick among the others, just because, and to look to separate from the pack of other pickers.

This was a big co and now that Scott McNally is gone new management reducing costs,laying off & starting to run it like a business. If I were a Mutual Fund I don't think I could lay off this turnaround story. Also new popularly priced new highspeed machines selling very well. See it $ 6.25 before earnings in Jan. & possibly high of $ 10.00 by Dec. 07
Breadman

Sun Microsystems has a poor strategy to fight commoditization in the server market. Sun was literally forced to open source Solaris because of Open Source linux versions, and has given away trials of SunFire servers. SunFire servers running the Niagara chip are over 4 times more expensive than comparable AMD based servers, and power savings using Niagara do not justify a high Cap Ex for customers.

It is eating humble pie in the utility computing marketplace, where IBM and more recently, Amazon are much further ahead.