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Technology Stocks : All About Sun Microsystems - News Only
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To: High-Tech East who wrote (6)2/2/1999 9:30:00 AM
From: Sonki  Read Replies (1) of 36
 
TECH CONF...Sun Microsystems (SUNW)
At the beginning of this SRO (Standing Room Only) presentation, Michael Lehman, VP of Corporate Resources and CFO, had trouble with his notebook PC. It froze on the first screen. After playing with it, he announced "I think I better reboot this." Someone in the audience called out "Is that a PowerPoint presentation?" The audience roared with laughter at the implied swipe at Microsoft. Mr. Lehman responded "I can tell you it's not a Solaris based notebook." The audience laughed again as the Windows logo appeared on the display as the PC rebooted.

Sun made 3 strategic bets 3 years ago: 1) Internet and network computing will grow; 2) Java will be adopted; 3) Bandwidth problems will not inhibit Sun growth. All three now working out.
Alliance with AOL/Netscape will help make all three bets stronger
Making a big push now in developing technologies for wireless broadband; believes broadband adoption will be strongest when wireless arrives
Stressed financial strengths: operating margin steadily increased from 10.7% in Q1 97 to 13.5 in Q2 FY99 (quarter just finished). Generates $775 million in cash in last six months. Plenty of money for R&D.
Will be stressing SG&A (Sales, general, and administration) efficiencies this year. Goal is to remove 300 basis points (3%) over 3 years.
Briefing.com summary: A somewhat hurried presentation, but well received. The emphasis on financials, from a CFO, is always better received by buy side analysts than technology explanations. Many buy side managers simply don't want all the complex details of technology. When a company says they will squeeze 3% out of the SG&A line item over three years, they take notice. Those savings should fall right to the bottom line. If Sun can raise its operating margin even further, to 16% by 2002, that is a lot of additional earnings. Sun is already incredibly profitably, with substantial revenue growth and good profits. Add 3% more to the margins and it really adds up. Our guess is that this one statement is the one remembered by most analysts at this presentation
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