Sun cushions slumping Q3 with layoffs
America (and possibly Reverend Wright) to blame
A rather humbled Sun Microsystems blamed waning US technology spending for its third quarter loss.
Sun's third quarter revenue dipped half a per cent to $3.283bn, as the company struggled to close large deals in the US. The slow quarter pushed Sun back to red ink with the vendor posting a $34m loss, which compares to a $67m profit in the same period last year. Sun now plans to layoff between 1,500 and 2,500 workers to lower costs over the coming year.
Sun's product sales dipped to $2.0bn from $2.1bn, while services revenue increased to $1.26bn from $1.22bn last year.
The company's always upbeat executives were rather put off by conditions in the US.
"There appear to be a number of customers whose spending is uncertain," said Sun CFO Mike Lehman.
Sun, however, was chipper about the sales of its UltraSPARC T1 and T2-based servers, which doubled year-over-year.
In addition, the company remained bullish about its high-end server business with CEO Jonathan Schwartz saying that the big iron Unix is "improving as we speak". And, in fact, documentation around Sun's move to Fujitsu's four-core SPARC VII chip has started to pop up on Sun's website. Sun should shift onto that chip in the second half of this year.
Schwartz also said that Sun has signed up a new Solaris x86 OEM, which will join partners such as Intel, Dell and IBM. But he declined to reveal the name of the vendor. (Wuss - Ed.)
Investors let Sun know how they felt about the quarter during after-hours trading as they shredded JAVA shares by 15 per cent, at the time of this report. ®
Headed towards the stellar graveyard?
Is Mr. "No one _still_ working at Sun calls me ponytail boy" Schwartz to blame? No more than any of the other top executives there. Like many, who rose too quickly, Jonathan is a victim of his own success. He believes that he really is smarter than just about everyone else, rather than realizing that he is just very lucky to be where he is.
There are a ton of things wrong with Sun, and fewer things going right. As for Sun's overall strategy, they do have a clue, but really don't know how to execute. Sun has never really been about execution. They've relied on being lucky and having the hot product at the right time. Even a blind squirrel finds a nut once in a while.
Their chip strategy is tenuous at best, their software strategy could pay-off long term, they just don't have a clue how to monetize the transition from proprietary software to open-source and paid support services. As for their storage 'strategy' well, Sun's never had a clue and continually show their naïveté. Their recent announcement (covered in the Register) about “developer tools” for turning a Solaris system into a storage appliance using ZFS is just laughable. Even if they are successful in killing their competitors’ storage profits, Sun has no plan for how they can make money.
However, Sun's real problems all stem (IMHO) from their culture of "be different", "engineers rule" and "If we didn't invent it, deride it". In my experience this type of culture rarely changes unless the board goes for a total shakeup. This can and does occur, ala IBM with Lew Gerstner in the early 90's. Though with Sun's board bought and paid for by My Sun himself (one Scott 'turrets syndrome' McNealy), a board induced turnover is unlikely.
The more likely scenario is to die a slow and painful death by 1,000 cuts as Sun slowly dwindles like former rivals Novell and SGI have done. It looks like this Sun won’t go nova anytime soon, instead it’s looking more like a brown dwarf.
cut the ponytail
the internal mails today told us…
- its due to the US economy
- “we” did all we could - “we” are good
- IBIS ( the oracle CRM system which has proved to be the ultimate disaster) had not impact
- Jonathan “I’m disappointed”… so to satisfy my ego I will sack 2500 people
- and we keep having more levels of management between ground floor and ivory tower == ponytail
- the big fear here is that Donald Grantham will once again not be able to make a decision.. and will simply cut 7.5% of all departments… hence making more and more departments/software utter crap instead of cutting off the real crap and saving the gems - yes Sun stil has gems… but management does not seem to realize this…. nor do they care as long as their personal bonus is paid out
its time for a revolution... and Mr ponytail, grantham and the likes should be put against the wall.....
Sun has good stuff... software and hardware... but it's (over)time to sack the money grabbers and get Sun back on track.... leading in development
When is sun
NOT performing layoffs?