Briefing.com Report at NationsBanc Montgomery Securities Technology Conference:
The NationsBanc Montgomery Securities Technology Conference is being held this week in San Francisco. Two hundred nine of the country's leading technology companies are making presentations to buy side analysts at the Ritz-Carlton Hotel through Thursday. Briefing.com is attending the presentations. Here are notes from some of today's presentations. Comments in the bulleted lists are paraphrased from the presentations. Briefing.com comments on the presentations are presented after the bulleted lists.
Sun Microsystems (SUNW)
At the beginning of this SRO (Standing Room Only) presentation, Michael Lehman, VP of Corporate Resources and CFO, had trouble with his notebook PC. It froze on the first screen. After playing with it, he announced "I think I better reboot this." Someone in the audience called out "Is that a PowerPoint presentation?" The audience roared with laughter at the implied swipe at Microsoft. Mr. Lehman responded "I can tell you it's not a Solaris based notebook." The audience laughed again as the Windows logo appeared on the display as the PC rebooted.
* Sun made 3 strategic bets 3 years ago: 1) Internet and network computing will grow; 2) Java will be adopted; 3) Bandwidth problems will not inhibit Sun growth. All three now working out.
* Alliance with AOL/Netscape will help make all three bets stronger
* Making a big push now in developing technologies for wireless broadband; believes broadband adoption will be strongest when wireless arrives
* Stressed financial strengths: operating margin steadily increased from 10.7% in Q1 97 to 13.5 in Q2 FY99 (quarter just finished). Generates $775 million in cash in last six months. Plenty of money for R&D.
* Will be stressing SG&A (Sales, general, and administration) efficiencies this year. Goal is to remove 300 basis points (3%) over 3 years.
Briefing.com summary: A somewhat hurried presentation, but well received. The emphasis on financials, from a CFO, is always better received by buy side analysts than technology explanations. Many buy side managers simply don't want all the complex details of technology. When a company says they will squeeze 3% out of the SG&A line item over three years, they take notice. Those savings should fall right to the bottom line. If Sun can raise its operating margin even further, to 16% by 2002, that is a lot of additional earnings. Sun is already incredibly profitably, with substantial revenue growth and good profits. Add 3% more to the margins and it really adds up. Our guess is that this one statement is the one remembered by most analysts at this presentation.
Oracle (ORCL)
What can you say about Larry Ellison? A showman and unashamed basher of Bill Gates, he is a master promoter and entertainer. Today, Oracle unveiled the Windows-NT killer machine: the Oracle 8i server, built by Hewlett Packard. This "network appliance" which is Intel based, but contains no Microsoft operating system, boots up an Oracle database, with a specific configuration for web applications. A customizable Java engine allows you to write any type of application, in Java, to access the database in any way you want.
Mr. Ellison's lunchtime keynote speech was both a lecture on the next major trend in the industry (the move to network thin client model), and the announcement of Oracle's new application server, which will make this next major trend possible.
Ellison's unveiled the very first ever shown HP 8i network appliance, then demonstrated via a browser on a PC, how you access data and configure the database completely across the internet. The server itself has no "monitor" attached to it.
Ellison's push is for a new model of network computing, the thin client model. This model places all of the shared data, and shared applications, on a centralized network computer, with minimal complexity on the client. Although heralded as new by Ellison, it is conceptually similar to the original mainframe and minicomputer model. This concept was originally pushed by Oracle several years ago with the NC, network client, a $500 monitor which never really sold because PC's quickly moved to the under $1000 price range.
A key element of the new computing model is that not a single piece of Microsoft code is required to have a functioning web-database server. The principal advantage, according to Mr. Ellison, is the reduction in complexity of operation. This brings a real cost savings in lower labor cost required to support a web server.
The 8i Network Applicance will be availble at the end of February. Pricing was not discussed.
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