This is funny, "wild-ass guess" -->
Thursday May 10 12:01 PM ET
Sun's McNealy Calls 2002 View Rough Estimate
By Jessica Hall
WHITE SULPHUR SPRINGS, West Virginia (Reuters) - Sun Microsystems Inc. Chairman Scott McNealy on Thursday called the network computer maker's forecast of 15 percent revenue growth in 2002 a rough estimate rather than a specific target since spending in the technology market remains in flux and too difficult to accurately predict.
When asked the about the 2002 guidance, McNealy said: ''Guidance is probably too strong a term any more -- wild-ass guess.''
``We've been pretty wrong the last three or four years. We've been low and we've been high and we've been worse. We really are going to have to lean on the external analysts to actually do some analyzing and understanding,'' said McNealy in an interview at The Business Council meeting of chief executive officers in West Virginia.
McNealy said Palo Alto, California-based Sun Microsystems (NasdaqNM:SUNW - news) does not use economic forecasts in making its financial projections, but relies instead on internal data on customer orders and buying patterns.
``We use bottoms-up forecasts from our field, the pipeline -- an understanding of where our customers are -- but our customers' expectations and plans change and it blows our wild-ass whatever (expectations). That's just how it happens. It happens much quicker and much more often because people are replanning their business daily,'' he said.
McNealy said Sun continues to see a pretty severe capital spending slowdown in the U.S. and there are indications that it's spreading to Europe.
At a press conference on Wednesday, McNealy joked: ``People are claiming that they're seeing the bottom. I don't know where they're getting that data. They certainly didn't see the cliff, so how in the world can they see the bottom?''
As a result, it remains difficult to predict when or if demand would return to more predictable patterns, McNealy said on Thursday.
``We'll know how the quarter ends June 30. There's some bright spots and some weak spots around the world. I think at some point there's a backlog of IT (information technology) projects that are building up. Things change day to day. It's not like we have trends anymore. We have a trend only when you add up the 90 days of a quarter,'' he said.
As Sun faces a slowdown in its core server market, it has increased its focus on storage products as a new area of growth. Some industry analysts have questioned whether Sun, which launched its T3 storage system last year, can effectively challenge storage leader EMC Corp. (NYSE:EMC - news).
McNealy said the storage market ``is a multi-billion business for us. It's growing nicely.''
``We really see that as a big low-hanging watermelon out there to be harvested big-time. A lot of people are tired of paying through the nose and paying these high prices to EMC. They ought to come in (and) try us out. You know, storage is not that hard,'' McNealy said.
The company has worked to improve its business practices, field coverage, and field knowledge to strengthen its storage operations.
Sun plans to continue to cut costs without laying off workers. McNealy said it is too costly and unproductive to fire employees during lean times only to have to rehire and retrain them in boom times.
``A lot in the next round in efficiency and productivity gains are going to come from the fact that we're cleaning up a lot of our business practices. When we were growing at 40-60 percent, we were making a lot of mistakes -- a lot of quality errors, a lot of coverage errors, a lot of sloppy processes, lack of processes -- we're cleaning up and doing a lot of things better,'' McNealy said.
``Shooting doughnuts was the easy short-term (way to cut costs). Mid-term we can change processes, and longer term I think the only way companies are going to get more effective is going online and that plays to our product and plays to our efforts to dot-com our own company,'' he said. |
