It took Wall St. awhile to decide just how bad Sun’s (SUNW) last quarter was. Revenue rose only 3.3%. Profits were due to cost cuts.
As one analyst told CNBC, the future may not be so hot, either: "People are a little concerned about the demand trends. It does suggest there could potentially be a slowdown in their server business," said Pacific Crest Securities analyst Brent Bracelin. "What had gotten people excited was their server business for the last three quarters grew."
Sun’s new CEO Jonathan Schwartz has been in office for a year now. After a nice run, Sun’s stock has given back virtually all of its gains. Last April 28, the stock traded as high as $5.05. Today, it has dropped as low at $5.20. Bring back founder Scott McNealy. At least he used to insult competitors like Microsof tin public. All Schwartz does it write a blog.
The future for companies selling servers is less and less bright. Research firm IDC has dropped its estimates for server sales growth because of the increase in use of vitualiztion software and the power of new multi-core processors.
Sun made big promises, but it may just be in the wrong business.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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