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Tuesday, November 01, 2005

Sun Microsystems continues to wallow (SUNW)

How much longer are investors going to put up with McNealy and his new pony-tailed sidekick "The Schwartz!"? Sun is still in a bad place. Earnings disappoint.
The bright spots? They made over $250MM in operating cash flow. I like cash flow. They also have over $4.5 billion in cash. Cash is my second favorite thing. Deferred revenue was up as well.
Software smells like it is gaining momentum and so does hardware, but my gut tells me that Sun has a huge beta to infrastructure technology cycles and I don't know how durable this rebound is. I'm seeing more moderate growth ahead with a lot of it going to newer technologies with much lower costs.
They say that results were helped by acquisitions. I'm going to guess that StorageTek contributed a good bit this quarter. Networked storage products did well but there's some distortion from the StorageTek integration. We're all about the storage refresh cycle here at TechTrader world HQ.
I guess all in all, I think the company has a hard time figuring out its hardware v. software strategy and winds up spending too much time chasing too many rabbits. If more start-ups like Fabric7 keep coming out and leveraging lower cost and OpenSource opportunities, Sun's will continue to have a hard road to hoe.


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