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

To: Mephisto who wrote (14675)	3/11/1999 11:38:00 AM
From: QwikSand	Read Replies (4) \| Respond to of 64865

Mephisto: Here it is. --QS Hardware & PCs Sun Microsystems Says Its Fate Is in Its Hands By Eric Moskowitz Senior Writer 2/22/99 7:19 PM ET URL: thestreet.com PALO ALTO, Calif. -- Located just off Highway 101 at the northern tip of Silicon Valley, Sun Microsystems' (SUNW:Nasdaq) Palo Alto Building 1 is an orderly and low-key facility. Formerly, it housed Ford's (F:NYSE) aerospace division, but now it's where you'll find Michael Lehman, a 12-year Sun veteran who also prefers a low-key approach. Lehman, who serves both as Sun's CFO and as its vice president of corporate resources, sat down for an interview with TheStreet.com to discuss Sun's financial outlook, the company's relationship with Microsoft (MSFT:Nasdaq) and Lehman's willingness to let CEO Scott McNealy and COO Ed Zander serve as the public face of the company. Joining Sun in 1987, Lehman is now in his fifth year as the company's CFO. Previously he worked as a senior manager in the San Francisco branch of the accounting firm Price Waterhouse. TheStreet.com: With America Online (AOL:NYSE) expected to close its Netscape (NSCP:Nasdaq) acquisition next month, tell us about the AOL-Netscape deal from Sun's perspective. Michael Lehman: You know, it's interesting because a lot of people asked us why we didn't just buy Netscape outright. Well, Sun has always been a big believer in owning its own intellectual property and not [just] in owning content, so we weren't interested in Netcenter]. We were interested in its application software and seeing how it could complement ours. [Sun is paying Netscape $975 million over the three years and $275 million in licensing fees to AOL, according to Sun's latest 10-Q.] TSC: Sun's stock price has more than doubled since last October. Are you worried that Wall Street will expect too much from "the .com company" now that Sun is so busily promoting its Internet presence? Lehman: We don't want to get into the game of providing direct guidance to the Street. We instead try to provide general expectations. For one thing, we have told the Street that our [revenue] growth rate will be higher than in the first half of our fiscal year, when it grew 16%. But analysts are already putting a 20% revenue rate out there, and that's a figure we are not guiding analysts toward. I am not that numbers-oriented, but it's good to have a range of estimates out there. [Currently, the range is 18% to 20% year-over-year revenue growth during the company's third and fourth fiscal quarters.] TSC: Everywhere we look these days we see Sun in the media: Scott McNealy on 60 Minutes, McNealy, Ed Zander and Jini creator Bill Joy in Business Week. Will we be seeing Lehman soon? Lehman: [laughs] Absolutely not. I like talking to analysts, shareholders and customers. Scott, Ed and Bill enjoy the limelight far more than I do. TSC: How does Sun stack up in its industry? Lehman: We feel we are breaking away from the traditional companies such as IBM (IBM:NYSE), Hewlett-Packard (HWP:NYSE) and Compaq (CPQ:NYSE) and going more toward newer competitors Cisco (CSCO:Nasdaq), Lucent (LU:NYSE) and EMC (EMC:NYSE), at least in terms of our growth rate. TSC: Speaking of EMC, Sun is entering the storage field at the same time as others such as Dell (DELL:Nasdaq). Is the level of competition in this emerging field a concern? Lehman: No, not really, because it is such a largely expanding market. [Lehman doodles a $35 and $40 on his purple Sun pad, to suggest that he feels the storage market is a $35 billion to $40 billion business.] In the next nine to 12 months, we will be rolling out our vision of network-attached storage, where our software will connect storage devices to one another. We want a networked consumer in a post-PC world. TSC: Are PC companies on the way out? Lehman: No, PCs aren't going away, and Dell, which has outexecuted the rest of its industry, will continue to grow rapidly. But the industry's overall growth rate is slowing, while we feel we are just beginning to hit the sweet spot for networked computing. TSC: The idea of network computing has been Sun's vision for some time. It also happens to jibe with Microsoft's vision. What's your relationship with them now? Lehman: Obviously, they are not a friend, and everything they do is against us. Scott has taken them on in the media for a long time because we feel we are different and that there is a better way, and that is networked computing and network-attached storage. TSC: What should investors look for in terms of Sun's financial future? Lehman: Lower [selling, general and administrative] expenses, higher operating margins and execution. With projects such as our UltraSPARC III [the next processor for Sun's Solaris operating system], we need to execute. Our fate is in our hands. c 1999 TheStreet.com, All Rights Reserved.