Sunday, October 05, 2008

As Tech Slips, Sun Could Stumble - BusinessWeek

Check the full article for more details

Sun may be particularly vulnerable. Consolidation on Wall Street means fewer customers to go around, and the company is at a disadvantage if it has to compete in a price war against rivals like Hewlett-Packard (HPQ) and IBM (IBM). Although Sun has laid off 6,500 workers since Jonathan I. Schwartz became CEO two years ago, the computer maker still spends far more on research, development, and administrative costs as a percentage of sales than does HP or IBM. Schwartz has made bold moves, including giving away the company's software to spur server sales, but growth is sluggish. Sales fell last quarter and are expected to rise less than 2% through mid-2010. "Sun has excellent technology, but do they last as a stand-alone company?" asks analyst Sushil Wagle at J. & W. Seligman. "My gut tells me that at some point, they'll be part of something else."

The final paragraph:

Roger McNamee, a partner with the Silicon Valley private equity firm Elevation Partners, says the current market turmoil calls for unconventional thinking. Among other things, he says tech executives should ignore the wild swings of their company's stock prices and focus on their businesses: "Placating your shareholders for the next 90 days is a losers' game."

As Tech Slips, Sun Could Stumble - BusinessWeek

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