Scott McNealy BW interview "What were you thinking?"
Q: Sun's stock hit a high of $64. Did you think what tech stocks were doing two years ago was too good to be true?
A: When I married my wife seven years ago, Sun's stock was at an equivalent of about a buck. It's about $9.50 now--$9.50 from $1 over seven years. She thinks she's a pretty good CEO wife.
Q: She married well.
A: No, she trained me well, and the stock made a nice move since we got married. But two years ago we were selling at 10 times revenues when we were at $64. At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don't need any transparency. You don't need any footnotes. What were you thinking?
Q: What were you thinking?
A: I was thinking it was at $64, what do I do? I'm here to represent the shareholders. Do I stand up and say, "Sell"? I'd get sued if I said that. Do I stand up and say, "Buy"? Then they say you're [Enron Chairman] Ken Lay. So you just sit there and go, "I'm going to be a bum for the next two years. I'm just going to keep my mouth shut, and I'm not going to predict anything." And that's what I did. |
