Hewlett-Packard Co’s been hit with a few curve balls leading analysts at Merrill Lynch & Co to downgrade its mid-term rating of the stock to neutral. Heir-apparent Rick Belluzzo has flown to Silicon Graphics Inc; Compaq Computer Corp’s overtaken it in computer system revenue and is staking out its enterprise credentials; Sun Microsystems Inc’s poised to take the lead in Unix server according to reports; and it’s dumping the graphics technology it last ballyhoo’d as an SGI-killer. The bank’s Steve Milunovich says HP will likely have trouble regaining the Unix high ground. Sun was able to use HP’s endorsement of NT to put HP on the defensive in Unix. We think HP has permanently lost ground to Sun in Unix servers, so that the problem is more than being nine months late with the V Class. HP is spending $40m on advertising convincing CIOs that HP hasn’t deserted Unix. Sun appears to be outgrowing HP despite HP’s new product cycle.
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