To All: Here is the latest from Sun regarding new revenue opportunities for the next few quarters...
Sun To Push Java Licenses And New Desktops (10/17/97; 9:00 a.m. EDT)
By Deborah Gage, Computer Reseller News
MOUNTAIN VIEW, Calif. -- Sun Microsystems CEO Scott McNealy said Sun will introduce new desktop products, cut prices, and push harder on Java and Solaris licenses in the face of lower-than-expected earnings for the first fiscal quarter ending Sept. 30.
Sun missed analysts' expectations of 44 cents per share, according to First Call, reporting earnings of 41 cents per share compared with 32 cents a year ago. Including one-time charges for the acquisitions of Diba and Integrity Arts, earnings were 27 cents per share. McNealy spoke to analysts during a conference call following the release of Sun's earnings.
During the call, Sun executives said earnings were adversely affected by the strong dollar, aging product lines in some areas, currency devaluation in Southeast Asia, and weaker OEM and technology licensing business. The licensing is a combination of business generated by SunSoft, JavaSoft, and Sun Microelectronics (SME), Sun's software and chip units.
SME is expected to announce a new OEM strategy in San Francisco next week.
McNealy said Java is "absolutely critical to defending and further encroaching" on the desktop. He said Sun has been shut out of the volume desktop market for the past five or 10 years because of a lack of applications.
"We haven't had the applications and especially not Microsoft Office," McNealy said. "But people are moving from spending all their time in a Windows environment to a Java browser environment, and every day ... we have 700,000 programmers writing applications that can run in Java browser on Sun's desktop, and we can compete and win.
"One of the most important announcements for us will be IBM-Lotus' Kona Beans in early November," McNealy continued."We like the market opportunity opening up, but we're not altogether there yet."
McNealy also said there were no further developments in Sun's lawsuit against Microsoft for violating its Java license agreement, and he expected it to "take the predictable length of time, which is,'Who knows?' "
McNealy said Sun's biggest challenge is convincing enterprise customers it can offer the same level of service and support as IBM, and said Sun is hiring and investing in those areas.
He also said he was not disappointed with Sun's Enterprise 10000 server, even though sales are down slightly from last quarter when the server shipped. He said Sun will introduce new products around the Ultra 30 workstation and will aggressively push Sun's new Enterprise 450 workgroup server. Resellers have complained Sun mispriced the servers.
"We're trying to aggressively change the manufacturing model, take the costs out, touch the product as little as possible, and get it to the customer as directly as possible with the lowest possible cost," McNealy said. "It will take us two to three years to get that worked out, but from a systems perspective, we want to get much more directly to the customer without touching the product, better build to order, and so forth."
Sun chief financial officer Michael Lehman cited shortfalls in Europe, Southeast Asia, and Latin America. He said Sun has added employees in JavaSoft, field sales, research and development, and service and support and will add "a few hundred more." Sun employs 22,867 people.
First quarter revenues were $2.099 billion, up 13 percent from a year ago.
Copyright (c) CMP Media, 1997.
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It looks as though SUN will crank up the Java License machine specifically the "OEM and technology licensing business". According to McNealy the IBM-Lotus agreement (to be announced in early November) is "...One of the most important announcements for us...".
Also look for new hardware products but McNealy hinted that the company is in the process of changing their entire "manufacturing model" to a build to order design. This may take up to three year to implement.
I am a little concerned that Sun's new manufacturing model will take this long to implement. Why cann't they do it faster...like in 18 months?
EKS |
