Saturday, March 06, 2004

NYT: Sun Microsystems Debt Cut to 'Junk'

NYT: Sun Microsystems Debt Cut to 'Junk' "Friday's move by the credit agency is a big blow to Sun's recent efforts to turn its fortunes around. During the second quarter of fiscal 2004, the company's revenues topped analysts' projections, rising 13.9 percent over the first quarter, the highest growth rate from a first quarter to a second since 1998. Sun's stock closed Thursday at $5.16 after starting off the year at $4.49
Ms. Toll-Reed said the company continued to face enormous hurdles in the server market where it competes with I.B.M. and Hewlett-Packard, as well as with Dell Computer at the low end of the market. Dell has in recent years moved aggressively into that market, selling less-expensive servers based on industry standard technologies like Linux and Microsoft Windows. By contrast, Sun continues to rely on selling more-expensive servers, based on its own proprietary version of Unix.
"The biggest competitors are clearly I.B.M. and H.P., but not to be discounted is the low-end impact of a Dell Computer, who's got a very effective cost model," Ms. Toll-Reed said. "You can't do the same things with a Dell server and a Sun high-end server, but the cost factor is not to be underestimated."
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