I presume the large down in Sun today (to new 52 week low) due to the two negative pieces in Barrons (below), amplified by the general downdraft. Really, no new info of significance in the pieces, but they do ladel on more gloom. (Hint to Sun CEO: Now would be an excellent time to release any revenue bounce news, in whatever areas of Sun's business, if indeed such events exists.) I feel that we're close to a time when Sun must provide solid evidence that its business model is working.
Best, Mark
September 26, 2008
Weak Techs Fade As Economy Heads To Toilet (AMD)(JAVA)(EMC)(HPQ)(IBM)(VMW)
Joe Tucci, the CEO of EMC (EMC), has done his best to ruin his company and its spin-out VMWare (VMW). VMWare has the look and feel of a public firm but Tucci holds it captive and he recently pushed out its CEO. Since the beginning of the year, EMC is off 30% and VMW is down nearly 70%.
As the leading vendor of storage management, it is hard to see how EMC shares have fallen so far, unless Wall St. looks at its stewardship of VMW.
VMWare's lead in virtualization software meant a great deal to investors after the company's IPO. Its products promised to be among the most important corporate IT purchases over the next decade.The perception that the firm is not free to run its own operations and is entirely controlled by a much slower- growing company is the largest concern among shareholders. Tucci is killing his most valuable child.
As the economic pressure of a slowdown undermines investor confidence in almost all equities, the stocks of those companies which are most poorly run will fall at rates which are two or three times greater than their peers.
Sun Microsystems (JAVA) joins EMC in this category. JAVA shares trade near a 52-week low at $7.66 down from a period high of $25.04. The stewardship of Jonathan Schwartz has been remarkably poor. Unlike competitors including HP (HPQ) and IBM (IBM), he has been unable to field a viable set of hardware and software products. Revenue at the company runs flat and the most outstanding management effort is devoted to cutting jobs. The firm has no viable future and it is a wonder that the board has not sold it off.
The last large also-ran among tech companies is AMD (AMD). Hector Ruiz is finally out as CEO, but for reasons which will never be understood, the board has kept him on as chairman. He engineered the firm's ludicrous buyout of graphics chip company ATI. The only realistic way for AMD to turn a corner is to move outsource its manufacturing to save capital. Most likely the work would be done in Taiwan. As odd as it may seem, AMD has not fixed any public timetable for this. It stands to be more urgent as the economy around the world turns down and IT spending is likely to fall off.
A recession often weeds out the most poorly run companies, and certainly sets their stocks back more than other shares in their industries. The chance of AMD, EMC, or JAVA making any recovery during the next year is close to nil.
Douglas A. McIntyre
September 26, 2008, 1:24 pm
Sun: Where Are The Shareholders’ Chauffeurs?
Posted by Eric Savitz
I was poking around looking for an explanation for today’s slide in Sun Microsystems (JAVA) shares when I read a fairly astonishing AP piece from a couple of days ago on the pay package paid in the June 2008 fiscal year to CEO Jonathan Schwartz. It turns out that Schwartz in fiscal 2008 was paid $11 million, a 44% raise over his fiscal 2007 compensation package. That includes his $1 million salary, a bonus of $1.04 million, 66,000 restricted stock units and options on 500,000 shares. Schwartz also received $52,000 for a car and driver - i.e., he gets a chauffeur - to transport him to work for what the company describes in an SEC filing as “security and efficiency reasons.”
This all for a 12-month period in which Sun had zero growth, zero profits, and its stock dropped 48%. Since the end of the June fiscal year, the stock has dropped another 25% on top of that, for a 15-month decline in its share price of 64%.
So you can see why he needs the security for the drive to work: protection from angry shareholders. |
