Tuesday, August 03, 2004

What's Next? A Schwartz Poll on Buying Novell?

What's Next? A Schwartz Poll on Buying Novell? "Seems like the guy who is supposed to save Sun from obscurity can't quite decide how to go about it. And running a company isn't supposed to be a popularity contest. Still, I'll try to help him decide:
Unless something significant happens neither Sun nor Novell are going to exist five years from now. A case can be made that Novell barely exists now, unless you happen to still be running NetWare. Sun talks about its great cash position for doing acquisitions but what that really means is Sun still has enough cash to try to buy its way into some new business it can't develop on its own. But the company is also bleeding cash, better spend it (wisely) now than lose it later."

4 comments:

Anonymous said...

Please fact check - Sun is a cash PRODUCER, not a cash CONSUMER. They've got a lot of latitude...

pbokelly said...

Actually, I think Sun is a cash consumer; without the mega-$ transfer from Microsoft to Sun during Sun's last quarter, I think it was deeply in the hole.

Anonymous said...

Actually, you're wrong - check their financials. They're wizards at producing cash - which is separate from the completely opaque "EPS" numbers that no one understands any more. Cash is a fact, earnings are an opinion.

pbokelly said...

This is straightforward math -- go read http://www.sun.com/aboutsun/investor/earnings_releases/ and factor in the "Results reported today include $1.6 billion of other income, and $350 million in deferred other income related to the Microsoft settlement" part. That's cash-positive if you include the one-time intellectual property licensing from Microsoft, but they're deeply in the red for their overall business operations.

There's a very good reason why a recent issue of BusinessWeek had a cover story on McNealy titled "Sun: A CEO's Last Stand" (http://www.businessweek.com:/print/magazine/content/04_30/b3893001_mz001.htm?chan=mz&)