Schwartz: Not worried about Sun's future

Vendor's first financial priority is to generate free cash flow and its first strategic priority is to grow its available market

Sun Microsystems President and CEO Jonathan Schwartz is not worried about the relevance of what Sun offers or about the role of information technology, despite the current difficult economic climate.

In the first of a planned series of three or four blog entries on Sun's future, Schwartz said the company will have announcements this year pertaining to open source storage; networking; OEM partners on Solaris, MySQL, and Java; cloud offerings; and startup programs. His blog was accompanied by a video message echoing the written sentiments.

"Sun is privileged to have an exceptionally strong balance sheet, over $3 billion in cash, and a nearly two-decade history of generating positive cash flow," Schwartz wrote in his blog. "We've also got a set of technologies and people that continue to play an ever more vital role in the economy. Sun's products help companies grow and help them consolidate, and they help governments stimulate the economy, as well. From building bridges to automating health care, government stimulus will undoubtedly drive technology investment, and we're well positioned to participate globally."

He continued, "Which is all to say, I'm neither worried about the role information technology will play in the economy, nor am I worried about the relevance of Sun's offerings. I'm not worried about the future, I'm focused on its arrival date."

Schwartz also said he has customers who have been struggling and those who have been succeeding.

"Let me start by joining the chorus of those worried about the global economy. I am routinely talking to customers now partially owned by governments, whose share prices have declined 95 percent or more, whose balance sheets and basic business models are under extraordinary duress. Like every business, our health is a derivative of our customers', and to that end, we've got our challenges -- sure, innovation loves a crisis, but only after customers have stepped out from under their desks," Schwartz said.

But other customers, such as media startups, telecommunications firms, and government agencies, have "never had it better," said Schwartz. But these are a "cheerful minority," he said.

Sun needs to recruit developers to use Sun software and services, deliver compelling commercial offerings, and execute selling and service connections related to the first two priorities of recruiting developers and providing products, Schwartz said.

Sun's first financial priority is to generate free cash flow and its first strategic priority is to grow its available market, said Schwartz. "When they're in sync, as I believe we are in our Open Storage business right now, you have to beat us in the free software community and then again in front of paying customers. That's a tough combination, especially if you're a proprietary storage vendor that pretends to like free software, so long as it doesn't compete with your products," Schwartz said.

For the company's second fiscal quarter that ended December 28, 2008, Sun reported revenues of US$3.22 billion, a decrease of 10.9 per cent compared with $3.615 billion for the same quarter a year earlier but an increase of 7.7 per cent compared with the $2.99 billion in revenue during the company's first fiscal quarter.

The company reported a net loss of US$209 million for the second quarter.

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