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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: JC Jaros who wrote (29181)	3/20/2000 1:16:00 AM
From: rudedog	Read Replies (1) \| Respond to of 64865

JC - CPQ was a better value in 1995 through 1997 than SUNW... but you are certainly correct about performance since 1998. CPQ has been the sickest dog in my kennel for nearly 2 years. In hindsight, I feel a lot differently about many of CPQ's moves over the last 5 years than I did at the time. Going back to "The Unix Philosophy" - SUNW is about as close to a company that does one thing and does it well as I have seen... if we can take something as broad as "Unix standard bearer" and call it a thing. That focus and purpose has carried the company through turbulent times more than once and it has a lot to do with both current success and future prospects. CPQ nearly collapsed under the weight of a number of ill-conceived acquisitions - in fact, I don't think they have done an acquisition that I particularly liked. They bought several networking companies in 1995 and 1996, spending close to a billion dollars in the process. The people, technology and markets from those acquisitions pretty much disappeared, along with CPQ's ambitions to challenge Cisco. Then they bought Tandem for $3B. Tandem had good people and some great technology, but it seemed a very unlikely match to me - the things CPQ needed from Tandem could have more easily been obtained through an OEM deal, or maybe a JV... as far as I can tell, CPQ was looking for clustering technology and switch fabric expertise. Tandem's business was a very narrow high end niche generating about $2B in revenues annually, had been at that level for maybe 10 years, and as far as I can tell is still at about that level now. I'm sure the culture clash between the Tandem and CPQ people was huge, they were coming from different planets. If Tandem was a strange acquisition, DEC was stranger yet. CPQ needed the services capability to maintain their enterprise growth, and evidently thought the only way to get it was to buy it. But the idea that a company with a dynamic entrepreneurial culture could absorb 5 times as many people from a decayed legacy company seemed unlikely... more likely is that the faster moving people get surrounded and rendered ineffective much like the EDS people when GM bought them (6000 EDS staffers, 60,000 GM computer people - guess which culture won out). From a financial standpoint it was a good deal - CPQ paid $9B but got back nearly $4B immediately in cash and tax credits, and got another $8B from the sale of Alta Vista. But the damage to the company's culture and momentum more than made up for that IMO. At the moment CPQ is a mixture of semi-compatible pieces and I suspect it will be a very different company in 2 years than it is today. I can't yet figure out what will happen but I'm willing to hang in a little longer, if only to see how it turns out. But here's a prediction - on a percentage basis, starting from today, CPQ will outperform SUNW as a stock in 2000. But not after that... Any takers???