Sequent Computer Systems Inc may be the next taker for Sun Microsystems Inc’s 64-bit Solaris x86 Unix-on-Intel operating system following NCR Corp’s recent decision to use it on its Intel servers (CI No 3,216). At least that’s the impression Merrill Lynch & Co was left with after Sequent’s top brass had bent its ear about the quarter. The Wall Street brokerage house says it expects Sequent to run its existing 32-bit Dynix/ptx operating system underneath Sun’s APIs because it scales better than Solaris. Sequent’s been shopping for a 64-bit solution to beef up Dynix/ptx which it uses on its high-end Intel-based ccNUMA servers after coming to the conclusion that Santa Cruz Operation Inc’s Unix for Intel simply wouldn’t be up to its very high-end requirements. Although SCO has been endorsed as Intel’s preferred flavour of Unix for the next-generation 64-bit Merced microprocessor, Merrill Lynch & Co thinks Solaris is quickly becoming the Unix-on-Intel standard and believes Intel is now involved in the discussions to make this a reality. Sequent denied to us that it’s made any decision yet regarding its 64-bit source, claiming other technologies are still under consideration, though it wouldn’t say what those are. NCR’s believed to have campaigned hard to have Sequent adopt Solaris like it has done, after all NCR expects to be doing significant OEM business with Sequent, which be buying NCR 4300 WorldMark servers and reselling with Windows NT as its Elmer Fudd line (CI No 3,082). Sequent CEO Casey Powell has previously said he believes that to be able to capture data center business from the mainframe gang a company needs a path to supporting NT, Intel, an understanding of the high-end business – channels, services, partners, integrators – and must be able to offer at least 70% of what’s available for mainframe data centers. Sun says it’s got more Solaris OEMs up its sleeve but isn’t saying who they are. Merill Lynch estimates Sequent will earn $0.24 on revenue of $216m this quarter, its third of the financial year. First Call’s average of analysts’ estimates for the period is $0.30. It says the end-of-quarter pipeline is a below its expectations for four reasons. One because less revenue from a $35m deal at Oxford Health will be recognized in the quarter than expected. Second, Europe is weak. Third, the fiber switch it’s getting from Emulex Corp that allows point-to-point connectivity between processors and storage will begin to ship on September 19, so it’s not clear how much will get out the door. And fourth, the effect of currency rate fluctuations. Merill Lynch says the $105m Boeing contract which was supposed to help Sequent smooth out quarterly bumps isn’t happening as quite as planned although it did ship $23m of kit to Boeing this quarter. Sequent reportedly expects full-year earnings to be around $1.00 per share for 1997 with 25- 30% growth and apparently has a shot at a 10% operating margin next year Sequent’s primary competition, ironically, is Sun, but claims Sun doesn’t really address mainframe-style, data center applications. Sequent’s still working on a system that’ll host NT and Unix. Merill Lynch thinks the system will use Intel’s Deschutes chip in late 1998. It’s expected demonstrate nodes of two quads each running Oracle Parallel Server on NT soon.
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