well well well what do we have here?
Sun Microsystems CEO Says Restructuring Is Possible (Update1)
By Dan Goodin
New York, Sept. 12 (Bloomberg) -- Sun Microsystems Inc. Chief Executive Scott McNealy said he's committed to increasing the company's profitability, a goal that may include further steps to restructure the maker of server computers that run networks.
``We've got to get this company to a higher level of profitability and we are going to do that through growth or through restructuring,'' McNealy said in an interview with Bloomberg Television. ``We are doing everything we can to grow into the current structure.''
Sun's shares are trading at their lowest price since December 1996. Sales dropped 32 percent in the year ended in June as businesses delayed buying new servers and as rivals such as Dell Computer Corp. and Microsoft Corp. delivered new computers and software. McNealy in October reduced his staff by 3,900, or 9 percent, less than some investors said was needed to stave losses.
``The cost structure is still sized for a hyper-growth market and we're clearly not in a hyper-growth market,'' said Christian Koch, an analyst at Trusco Capital Management, which manages about $50 billion and holds about 4 million Sun shares.
The shares of Santa Clara, California-based Sun fell 15 cents to $3.22 as of 4 p.m. New York time on the Nasdaq Stock Market. They've lost 74 percent of their value this year, compared with a 35 percent decline in the Standard & Poor's 500 Computer Hardware Index.
Industrywide sales of servers based on the Unix operating system, including Sun's Solaris, fell 25 percent in 2001, and are forecast to decline again in 2002, researcher IDC said.
McNealy needs to cut jobs by 15 percent more in order to return to historical revenue-per-employee levels, said Toni Sacconaghi, a Sanford Bernstein & Co. analyst, in a research report two weeks ago.
Sun's market value is now about $10.6 billion, less than analysts' fiscal 2003 average sales estimate of $13.2 billion, based on a Thomson First Call survey.
``We had more `buy' recommendations when we were selling at 10 times revenue,'' McNealy told Bloomberg TV. |
