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April 18, 2004

Sun accentuates the positive

Sun Microsystems Inc's senior management is in damage limitation mode following management upheaval and a twelfth successive quarterly loss, announced last week.

By CBR Staff Writer

Chief executive Scott McNealy has told Wall St things aren’t as bad as they seem, and that – actually – the situation is rather good with Sun’s product line at a 10-year high, money in the bank from Microsoft Corp, and return of prodigal sun and company co-founder Andy Bechtolsheim.

McNealy spoke as Sun announced the two more executives – volume systems vice president Neil Knox and chief marketing and strategy officer Mark Tolliver – are following Rich Green’s out of the company, and revealed enterprise systems executive vice president Clark Masters’ future is uncertain.

Sun’s software cadre are filling some of the gaps, creating organizational holes elsewhere. Software chief technology officer John Fowler is heading the x86 Intel and AMD and apparently leaving software, while software business management and marketing vice president Anil Gadre becomes interim chief marketing officer.

Add to this, Sun’s seemingly unending, and unwanted, charges: $364m covering 3,300 layoffs and property consolidation this quarter, and a further $275m spread over coming quarters. And Sun doesn’t have money to burn on such charges, last week recording a third-quarter $760m net loss on declining revenue.

Commenting on the quarter McNealy told financial analysts: Momentum stronger than the financials might argue.

Momentum, apparently, includes renewed focus on volume and reoccurring revenue, and signing-up ISVs to Java Desktop System (JDS) and Java Enterprise System (JES). Sun claimed 1,500 ISVs and five OEMs supporting JDS and an 88% increase in subscriptions to JES since the second quarter with 175,000 individuals signed-up.

Our product line is stronger now than it has been in last 10 years. It’s time to address the cost structure. We are going to be more aggressive in getting the back office out to suppliers. This is not a project this is a process, McNealy claimed.

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Turning to Sun’s $2bn Microsoft cash injection, McNealy joked the wire transfer had been successful before pointing out technology co-operation with Microsoft would help both companies products whilst seeing-off competitors.

We will take them into places they aren’t and they will take us into places we aren’t. If we do this right Sun and Microsoft will end up on the short list, baking off against each other getting more of a percentage [of the business] and our competitors will be getting less of a percentage, McNealy said.

This article is based on material originally published by ComputerWire

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