I listened to the entire conference call. Observations:
1. Mike Lehman, CFO, is not adept at answering questions without putting a negative spin on things, that's probably his job. He was given a couple of softballs (one by the Prudential analyst and one by Goldman Sachs, Laura Conigliaro- follow up question) which he swung and missed.
The latter gave Lehman the opportunity to stress that core business was strong and the shortfall was due to licensing, technology and OEM agreements that weren't closed. His response: "Not to split hairs on where the shortfall occured. I'll let my statements stand as they are" ...... Thanks Mike. As a shareholder, I know you don't care, but GS does have the largest institutional following in the industry. Thanks Mike.
2. McNealy was great: Are you happy with the results?
"Shareholders don't pay me to be happy. I'm never happy"
3. From the conference call, McNealy stressed revenues as opposed to margins. I anticpate some price cuts in the near term.
4. McNealy mentioned some upcoming announcements regarding new products in the near term including storage.
5. McNealy was in japan- undoubtedly working with the Japanese automakers about integrating Java into autos. he did mention Toyota briefly
6. Currency issues persist as well as weakness in Southeast Asia and parts of Europe (Spain and France were strong), and latin America.
7. Trying to get the Encore deal closed so they can start implementing their plan regarding that unit.
8. So far, this quarter is "normal"
9. Toughest part of selling SUNW was not product quality but support and service. Toughest competition was IBM, not HP
10. Strategy is fine. Need to execute better.
11. Java is material to revenue, not just an indirect benefit to sell more servers. (Java licensing revenue and currency problems contributed to the shortfall).
Overall McNealy interjected when necessary. He sounded cautious but confident. |
