Tuesday, 1 September 2009

A downbeat end for Sun Microsystems

(By Philip Carnelley, 1 Sep 09 09:45) Sun Microsystems has – presumably for the final time – filed its FY and Q4 results. Uncharacteristically, the filing was completely without fanfare – no conference call or even a press release. This reticence probably has its roots in the fact that, once EU ratification for Oracle’s takeover comes through – expected on 3rd September – then this once belligerent and market-moving company will no longer be master of its own fate. The unaccustomed quietness was surely also driven by nature of the results, which were pretty dire. Revenues for the quarter were down 31% year on year, to $2.6bn. The company made an operating loss of $169m (2008: $63m profit). For the year as a whole, revenue was down 18%, to $11.4bn and the company made a whopping operating loss of $2.2bn (2008: +$372m). Java software sales actually rose, but almost everything else was down. Products suffered more than services. In the fourth quarter (when most of the damage was done), products were down 38% year on year whereas services were down ‘just’ 18%. Services now account for 44% of Sun’s revenues.

These results say little about the state of the market as a whole, but a lot about customers’ uncertainty about Sun, and particularly the future of its product offerings. Oracle must be sore that the EU approval didn’t come through faster, as what it thought it was buying is shrinking by the hour – and increasing the opportunities for IBM, HP and other competitors. There is, it seems, a lot of scepticism or doubt in the market about Oracle’s future intentions for Sun products, despite the announced plans for an “integrated system – applications to disc”. Oracle certainly needs to move fast once it gets the green light.

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