Stars Align for Sun
For the next six months, Sun Microsystems employees should prepare to sleep less. Sun CEO Scott McNealy assured Wall Street Thursday that the company will not rest on its laurels, despite beating analysts' expectations by a penny a share.
"I've said before that anything above 20 to 25 percent growth rate stretches the company," said McNealy, who expects growth rate for the second half of 26.5 percent. "But we're putting no caps on taking legitimate orders from legitimate companies. If capacity and demand are available, we'll go for it. There are few moments in time when the stars are lined up in the right way, and this appears to be one...We'll take full advantage of it even if we get a few less hours sleep."
Sun plans to push hard to take advantage of consolidations--like the recent AOL/Time-Warner deal--and to become "the premiere platform for e-commerce" as winners and losers are determined over the next few months. Sun will also invest $1.5 billion in research and development over the next year. McNealy said he and Zander spending the majority of their time on availability and quality issues because "Webtone must be greater than or equal to dialtone." He also denied rumors that he plans to retire.
Despite Y2K concerns Sun showed growth in all areas, due in part to good forecasting, and did especially well in small servers, Enterprise 10,000 servers, and services. Sun Microelectronics also showed its strongest quarter to date. UltraSPARC III is sampling at both 600 and 750MHz, and Solaris 8 is due to ship next month.
Sun President Ed Zander cited several deals signed by Sun's Service Provider group and announced another with Enron Broadband Services, which will purchase $350 million worth of Sun hardware and services and will collaborate with Sun on the Enron Intelligent Network. He also said Sun has signed 268 startups in the last six months and has used its servers and ERP software as a foot in the door to "dot.com" traditional companies.
Sun by next June will handle all U.S. transactions online through eSun, will track orders, and will electronically deliver services and consulting, Zander said. eSun has been a concern to those partners who resell Sun products, but Zander said the move will decrease Sun's supply chain by 30 percent and save $700 million. He added that Sun "had its best quarter against HP in some time" despite their garage door ads.
One strategy Sun will not pursue is adopting Linux as its operating system. "It amazes me to watch IBM and all those other companies chase Linux the way they did Windows NT five years ago," Zander said. "They're diverting R&D to get Linux clustered and scalable, and if they want to chase that for five years, go for it. Linux is still low-end, and we're putting every ounce of R&D we have into Solaris."
Zander said Sun will announce "new capabilities" at the Solaris 8 launch next week to address Linux.