As least when founder and former CEO Scott McNealy ran Sun (SUNW) investors were used to a sting of bad quarters. New CEO Jonathan Schwartz has cut costs and promised he can restart grow. But, it appears most of the revenue improvement is coming because the company bought SeeBeyond and several other companies.
Schwartz now gets his chance to disappoint. Sun’s revenue rose only 3% in the last quarter to $3.28 billion and margins dropped to 44.5% down from the previous quarter’s 45.2%.
Sun blamed poor sales growth on challenges in the US and UK, but the fact of the matter is that it is some excuse every quarter. Sun’s real problem is that it cannot compete against larger companies that sell servers including IBM (IBM), Dell (DELL) and Hewlett-Packard (HPQ).
The company’s guidance indicated that the party may be over a Sun.
Along with the sucker rally in the stock. In April 2006, the stock hit $5.25. It does not trade much higher than that after its drop after hours yesterday. Year-to-date the shares are up 10%, but most of that will be given back today.
Bring back Scott McNealy. At least we were used to his bad quarters.
Douglas A. McIntyre can be reached at [email protected]. He does not own securites in companies that he writes about.
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