Who holds Sun Micro accountable?

6 thoughts on “Who holds Sun Micro accountable?”

  1. The other interesting thing is that Apple has been quietly entering the high-end enterprise field with their Xserves about 2 … 3 years ago? Their releasing their dual G5 configurations from IBM’s 970 chip (more info on that chip: http://arstechnica.com/news/posts/20040628-3937.html ) makes things even more interesting.

    Those babies are impressive bit crunching and churning machines. I was recently nerding around about them with a fellow Geek ( http://thisisfanzoo.com/blog/archive/2004/09/21/181.aspx#205 ) . I don’t think Apple gets the credit they deserve for their “humble” foray in the enterprise/server computing field.

    I could see these, along with the highly competitive market of 1U and blade x86/Linux solutions, quickly eat at their share of the high-end computing pie.

  2. I would go so far as to say this habit of blowing shareholder’s equity on acquisitions that are then squandered is endemic to Silicon Valley. Sun, is, without a doubt, the worst offender. I could be remembering wrong, but I believe they’ve actually acquired 3 java application server vendors over the years, and yet still can’t compete with BEA or IBM. So they definitely have a long history of not being able to integrate any acquired company into the fold.

    More provocatively, I’ve always wondered whether Sun, with it’s tight connections with VC in the area, is used as a bail-out provider for local companies that are doomed to go nowhere. So, the VCs need an exit, and Sun buys the company. Everyone is happy – except anyone who owns Sun stock. Has anyone ever looked at this?

    Or maybe that it is just killing competition through acquisitions. I mean, why else would the buy Cobalt – a company that was going to attack them directly via low-cost, Linux-based servers? Did they honestly think they’d be able to talk out of both sides of their mouth about Solaris and Linux and not either confuse the hell out of people or just look like they didn’t have a strategy? Either way, it’s a bad path.

    One more comment on this trend: in the latest issue of Business 2.0, they highlight a bunch of small companies that were bought up. What struck me about all of these companies was the incredible high price they paid for them. $29m for Oddpost? Now, I love this company’s product, but even assuming they had $10m in revenue (doubtful – but someone correct me if I’m wrong), that’s 3x sales for a company that is essentially a bunch of great javascript/dhtml programmers. Could you go out and hire or contract to get the same functionality for a fraction of the cost? Does adding 10-20k (again, my guess, but please tell me if I’m wrong) in users really make that much of difference to Yahoo?

    Now I know this is a small purchase for Yahoo and will probably pay off longer term, but I can’t help but sit back and think “man, that’s a lot of money for that.”

    They’re buying MonteVista – oh man, and I liked those guys. Too bad they’re done if Sun buys them….

  3. Damian… thanks for the post. brilliant points. in my opinion, SUN is the new AT&T. Everytime you are losing money on a deal, then you could sell it to AT&T. Well now SUN is doing the job, thank you very much.

    Talking about the Business 2.0 story, i wrote it, and i guess, the OddPost team got what Yahoo was able to afford. 2-to-3x revenues for a start-up is the price most companies in the non-tech world pay. Opportunity cost: ability to roll out a competitive product to new gmail and hotmail very quickly and be able to charge premium for it, Yahoo I think paid a fair price. most of the companies got fair valuations between 1.5 x revenues (or possible revenues) to 3 x possible revenues. Email me for offline discussion.

  4. I think one has to understand the work culture in Sun. The technical team over there predominantly have this ego as “if its not built by them, its not worth to adopt it or look at it”. So it doesnt matter if they cobalt or Watson or some XYZ. They are going to kill it. I would rather suggest selling it to somebody else may be Red Hat.

  5. Sun’s looking to buy out someone for around 5b cash. Looked at their sheet. Someones hiding the loot. What marketable securities do they have worth anything? Any accountant can post a billion here or there. The only cash Sun has is what MS paid them to hush. Plus they want to write off 400m in options before their uncle asks for it. Theres no one out there worth 5b. They’re not big enough to make a worthwhile acqusition. They should have been taken private, dropped the java enterprise suite. Get a new board. Drop AMD, 86 Linux. They have one money maker: Solaris/Sparc. If that don’t work, they go out of business. How can 11b in sales add up to nothing. This is a company that rewards thieves.Sun has nothing to offer anymore. Linux has killed them off. High end servers can’t compete with big iron. Java, what a waste of time.

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