Feeds

S&P drops Sun to junk status

Tough road ahead

  • alert
  • submit to reddit

Secure remote control for conventional and virtual desktops

Standard & Poor's Ratings Services last week dealt Sun Microsystems a blow by cutting its corporate credit rating to junk status.

In a research note, the credit rating company warned that Sun will have trouble boosting revenue in the near-term and that it faces tougher competition that ever before in the server market.

"The downgrade reflects weak and inconsistent profitability, and our expectation that Sun will be challenged to profitably expand its market presence," said Standard & Poor's credit analyst Martha Toll-Reed.

Word of the cut appeared to hurt Sun shares, during Friday's trading. After enjoying a recent run to more than $5 per share, Sun's stock dropped seven per cent on Friday to $4.80.

Sun has close to $1.3bn in outstanding debt but also boasts more than $5bn in cash.

The move was a surprise to some analysts who noted that Sun appears to have put the worst behind it.

"We're projecting them to show their first year-over-year revenue growth in the March quarter," Brent Bracelin, an analyst with Pacific Crest Securities, told the New York Times. "Sun certainly has several challenges ahead of it, but we're at the start of things getting better. They're in a better position now than they were last year at this time."

Still, Standard & Poors warned that Sun faces serious challenges in keeping its position as the leading Unix vendor.

"Sun Microsystems has a good but not leading position (based on all operating systems) in the highly competitive global server market, a relatively narrow revenue base - particularly in comparison to major competitors, and inconsistent profitability," S&P said. ®

Website security in corporate America

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
JINGS! Microsoft Bing called Scots indyref RIGHT!
Redmond sporran metrics get one in the ten ring
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Murdoch to Europe: Inflict MORE PAIN on Google, please
'Platform for piracy' must be punished, or it'll kill us in FIVE YEARS
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
Bono: Apple will sort out monetising music where the labels failed
Remastered so hard it would be difficult or impossible to master it again
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.