Sun's not so cheap trick doesn't work
A Unisys look-alike?
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Sun's share price has fallen so low it is about the same as before last year's reverse stock split. So is Sun turning into another Unisys?
In September 2007 Sun proposed a 1:4 reverse stock split (stock consolidation) to its shareholders as its share price headed down to $5, continuing a long fall. The three benefits were said to be an "increased, more attractive stock price ... [which] could return ... to a level that we believe is more consistent with other major, widely held companies ... reduced stockholder transaction costs [through] lower commissions to trade a fixed dollar amount of [Sun] stock ... [and] increased earnings per share visibility". The split went ahead in November, and the stock price went up to $20.
Hey presto. Or not. The stock is now down to $5.21 and the Sun's market capitalisation is under $4bn at $3.88bn. In August Sun authorised a $1bn share repurchase program because the funds of an earlier $3bn one, announced in the last quarter of 2007, were nearly exhausted. The addition was justified because, Sun CEO Jonathan Schwartz said, "[of] confidence in the continued growth of Sun's business and an ongoing commitment to increase shareholder value".
His confidence was misplaced. Whatever money Sun has spend on supporting its stock price since the split has been wasted, as the shares have lost three quarters of their value since then. (Sun spent $2.76b on share repurchasing in fiscal 2008.) In fact, adjusting for the stock split, Sun's pre-split September 2007 share price of $5 would now mean the shares were now worth just $1.20.
The Sun board and CEOs McNealy and Schwartz have presided over a stock price fall from the September 2000 dot com peak of $241.50, through a December 2000 2:1 split to $121.75, and now down to an effective price of $1.20, ignoring the November '07 reverse split.
Things are not looking up. Fiscal 2008 saw revenues essentially flat: $13.9bn vs fiscal 2007's $13.88bn, and net income down from fiscal 2007's $473m to 2008's $403m.
It was revealed that Schwartz' pay package was worth $11m in September, even though his commitment to increasing shareholder value has not been successful; stockholders who bought the shares in December 2000 have lost 98 per cent of their money.
Schwartz is now talking about a business cycle affecting everybody and says the reverse stock split was just cosmetic, as sophisticated investors should have known what was going on. A cheap trick, in other words.
You get the feeling that Sun is still yearning for its glory days and thinking it can still make it back, whereas for many observers Sun is a Unisys-type company. It's large, complex, twists and turns and has lots of strategies, but never finds the magic seed of growth inside itself. The spark has gone out and none of the myriad attempts to rekindle it have worked so far. Maybe it's time for a dose of CEO creativity, as more bad results are likely in the quarters ahead. ®
COMMENTS
Poor Matt
He's obviously scared of Solaris because he doesn't understand it.
He has no understanding of what Dtrace can do, doesn't know anything about virtualisation.
He's so delusional he thinks PHUX is a current OS.
It's funny and sad at the same time.
Matt and double speak
Sometimes Matt you show your complete lack of reasoning - ..Quote .. Ignoring that massive case of prior art, I think you'll find IBM were stung into copying Xen onto AIX to try and meet the hp-ux offerings of hardware partitioning, software partitioning, PRM and WLM which appeared YEARS before Slowaris finally got zones/containers.
- what are you saying - That HP invented hard partitions - to quote you - ...." Cough *mainframes* cough?
- In one sentence you start by comparing IBM and HP-rip-UX and then use that to prove a point with regards to Solaris? And very conveniently forgetting about Sun hard Partitions? LOL!
Question - do you HP supporters really believing that HP actually has a future roadmap for HP-UX? If not - one of the prorietary Linux distrubutions - as in RedHat, Suse, Ubuntu - is obviously a much better choice - or Bill's product of course.
Grave stone is for the demise of HP-UX - RIP - it was a great product when HP could still invent ...
Blindfold...
"OpenView Operations (which wouldn't have needed the extra plug-ins)"
Oh you mean those plug-ins where I'm sending bug fixes to HP, and then receive my own patches months later as "hey, we solved the problem"? LOL!
The same OVO where the German support once was great, then moved to India, and now is going back to Madrid?
"which means there is very limited RASS, so no real comparison to either VMware or other UNIX solutions."
You mean bloatware like IBM LPARS and VMware. Just ask those guys if they can provide some information about their product's overhead... IBM once had a Redbook out, strange it was pulled...
"IBM were stung into copying Xen onto AIX"
What are you talkin' about?
"hp-ux offerings of hardware partitioning"
You mean Sun Hardware Domains? HP and IBM still aren't able to match these.
"You may have "seen a lot", but you were wearing the Sunshiner Blindfold (TM) at the time and missed the reality."
Go ask anyone who has used Ovo if they liked it. Start with the Windows guys.
"And as for "inventing", you mention ZFS and Zones as Sun "inventions", but the former is a copy of NetApp's WAFL (even Sun engineers admit this, patent trial or not),"
And WAFL is a copy of technology invented before, so what do you want to tell me? All the patents on WAFL will be gone in a couple of months.
"There’s remarkably little information online about using MySQL on ZFS, successfully or not...." - hardly the ringing endorsement for a thriving community or even of Sun documentation for what you Sunshiners keep bleating are Sun's two biggest products!"
I haven't seen other inventing new filesystems lately (HP the least)? Oh, because it's a hard thing to do. But somebody has to do it. Linux and btrfs? See you again in 2012 for the first production release. Others are already using ZFS in production and have only good things to say...
"Niagara is about the only real case of Sun inventing a new product, and that has been such a limited success"
Limited success? I don't know where you live, but I know a couple of large environments that standardises on Niagara (II).
"Go ask any serious analyst which company"
Hey, you're using serious and analyst in one sentence!
It's amusing to read your comments, but it's more amusing to see that you're serious. Take your HP blindfold off.
Hewlett and Packard would turn in their graves, if they knew what HP has become...
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