David C. Bailey is the man you need to unzip for :)

Opinions are like belly-buttons.  Everyone has one and some hold more
water than others.

In particular, analysts are for the most part merely market
"astrologers" whose opinions carry unwarranted weight among the public
sheep.  Mr. Bailey is basically calling out a good opportunity to
short the stock...the bugger.

Although the entire market, across all sectors, is feeling the bite of
recession, the good news is that Sun doesn't have a glass jaw...they
have liquid cash significantly in excess of long term liabilities,
which means that even if all the creditors called in their debts, it
wouldn't kill the company (and this is exactly what can, and has,
killed other companies when the jitters set in).

That's not to say everything is rosy, naturally....but for all the
protracted doomsaying, Sun is hanging in there - and probably will
make it through.

Ah, my post above was in reply to the original post by "jman", which
seems to have been removed :)

it's ok, your post stands nicely on it's own too

I guess the good news (for JAVA longs) is that GS are very wrong
wayyyy more often than they are right
...so this analyst downgrade means 6-7 dollar target short term for
JAVA :)

Disclosure:  I have a few hundred short JAVA shares

Or maybe they downgraded it because it really will
underperform...occam's razor is a bitch.  I mean GS can't prance in
and out like us small timers can and another posters "rope-a-dope"
conspiracy theory is too complex to be realistic.

Just remember what drives stock prices up...profitability and
projected growth.  I am no expert on their hardware so I'll let longs
comment on that stuff.  As far as I can tell virtualization is eating
up the "dedicated server" niche.  Since they provide open source
software (aka free) and are involved with those stupid one laptop per
child corporate guilt schemes they have to sell a lot of "consulting
hours" or "training camps" as one optimist put it just to break even
on R&D, marketing etc.  Free products aren't what I'm about when it
comes to investing in a company.

Ah but this is exactly what is so misunderstood about the open source
strategy with Sun.

Since the bubble burst, the growth rate of the big enterprises has
drastically reduced (and, of course, many high profile enterprises are
collapsing).  There has been a change in the nature of how the new
enterprises are being born.

The facebooks, googles and youtubes etc. illustrate how business
evolve now.  What happens now is that some bright folks/students have
a good idea but no capital, so they have to prototype very cheaply
with what they know - and so far that's been mostly linux, apache,
mysql, and so on.

If the idea works out and takes off, venture capital investment
follows and their prototype grows into a business.  Do they throw
their stack away and by a mainframe & Oracle?  No!  They often inflate
the open source stack they built to scale with their business.

This is the point - open source is the vector for adoption.  Once they
have a business on their hands, they need more hardware, more storage,
they need support and an SLA.  Sun is very well placed to become that
adoption vector and once the business relationship is established, Sun
can provide whatever they need as they grow.

The problem is that this is a LONG term strategy, not a short term
one...it's going to take a while to see it bear fruit. I grant you
that communication of this strategy could have been better.

Sun will prevail - and that's why I'm sitting on my JAVA holding for
the longer term view.

Nevertheless, I wish you good fortune with your investment strategy!

All the best.
-J

It is for all those reasons that Sun will not make money on startups
as described above. Because of the free notion that Sun has, it cannot
charge when the bright folks/students convert from prototype to
deployment. If they have the understanding to develop a prototype in
MySQL, OpenOffice and Linux then they do not need a large team to
convert to deployment. They just need more computers. Sure Sun can
provide a sales team. But if the bright folks/students did all the
prototyping, then they can throw a few switches and they have a
deployment system.

Microsoft realizes this. Their prototyping system is free, but if your
database exceeds x then you need to buy servers. If you wish to deploy
a profitable system then you need licenses to develop a server farm.
The bright folk/students can step along in a MS platform using SBS
then full servers. But there are limits to the number of computers
that can be managed by SBS. Not that microsoft has it all right. They
are just making money on the concept.

What Sun needs to do is provide specific user interfaces for specific
tasks. The UI for the medical community is different than those used
in general business. The doctor does not care about the platform, just
the UI. If the Doctor can document his/her patient in the same amount
of time it takes to write it on paper and place it in a folder.

I am surprised that Sun (schwartz) did not realize this. There are
many distinct UIs that need to be developed for medicine. I have seen
most of the current UIs for medicine. Medicine needs a company like
Sun to grapple with this issue. There are tremendous profits in
medicine.

Aaron Guerami
http://aaronsjava.blogspot.com
http://aaronsreality.blogspot.com

But selling computers/storage etc. has been a core Sun business
since the beginning - so what's wrong with that?  And you completely
missed the issue of support.  It's all well being a couple of folks
with
a machine but when that scales up to a company with a business and
a demanding user base, they'll need some form of deterministic
support.

Of course, there's the other small fact that this evolution has
already
been observed, so while I appreciate your point of view, I'm
struggling
to agree with it.

I doubt you will see Sun engage in a segment specific user interface
effort. That's not aligned with the business model of a computer
systems vendor, it's more of a software application layer/consultancy
activity.

I'm surprised that with the tremendous profits available from this
opportunity that nobody has jumped on it already :)

Look, It is not the core business that is going to hurt Sun. It is
this notion that Sun will make available for free all their hard work.
The open source community had this handled. If you wanted a free
database. You went to MySQL. Now Sun has less cash and no money coming
in from software. This was not the business plan 3 years ago. If
schwartz wanted to support customers with MySQL they he could have
just done that. Just set up teams that would support MySQL databases
on Sun servers. Could have been part of the contracts. He did not need
to give whomever a billion dollars. MySQL was available to everyone!
How did MySQL distribute the profits from the sale of an opensource
system? What happens to MySQL if Sun fails?

Sun needs new lines of revenue, Now. They have choked on bad business
decisions, are they going to wait until they have nothing to redo
their business plan? They have already lost the processor wars. They
are building servers with other companies processors. I have done
that, in my closet.

I have a list of new revenue opportunities for Sun. Some are already
designed and need a large group to implement. I can put those
scientist back to work. It would be foolish not to build the UIs for
medicine. I won't leave money on the table for Oracle, IBM, or those
software application layer consultants. Too many jobs rely on this.

It is bad management and poor thinking that destroys great companies.
History does not determine a company's future. I don't see Sun doing
anything now but justifying bad decisions.

Aaron Guerami
http://aaronsjava.blogspot.com
http://aaronsreality.blogspot.com

Well, you need to look at slide 6 of the last earnings release, which
provides some insight into s/w earnings as well as systems :)

I've already explained how the "adoption vector" strategy is supposed
to work and that its a longer term strategy...clearly you disagree and
that's your prerogative.

My opinion, which clearly differs from yours, is that the longer
term strategy is broadly correct.  There are far more pressing
issues that need attention, I would say.

Fair enough - secure some venture capital and go do it.  After all,
as you point out, Sun's giving a lot away for free :)  I'm not trying
to be facetious here - if you genuinely have a well specified and
sound business plan, then go do it.

All the best!
-J

Clearly you sent me to this page to bolster your argument, but I don't
see how.
http://www.sun.com/aboutsun/investor/earnings_releases/Q109_SLD.pdf

I see a company that is going to miss its numbers by >22%. Now that
Cisco is getting into the game that could be worse. This company can
recover, but there needs to be a serious re-evaluation of their
business plan. "We don't do that, does not cut it".

The board has a copy of my plan. They can choose to work with the
epileptic or not. I don't care. They just need to get on the ball and
start building new lines of revenue. Too many jobs are at stake.

Aaron Guerami
http://aaronsjava.blogspot.com
http://aaronsreality.blogspot.com

It's really very simple.  You said "Now Sun has less cash and no money
coming in from software" which is demonstrably untrue.

At no point did I say that all is fine and dandy.  I'm simply
debunking your specific argument about software revenue.

For someone who doesn't care, you sure do seem to go on about it
from what I've seen of your posts here and on your blog :)  Your
communication style is rather typical of the ranting crackpot that
emails the top brass at a company with their "revolutionary ideas"
but if I've misjudged you, I apologise...if.

Cheers!

I read that Obama is tapping Sun to upgrade the government's computing
capabilities.  Can anyone speak to the hows and whys of this, as well
as the possible results, good & bad? Much appreciated!

http://www.federaltimes.com/index.php?S=3039481

The federal government cannot bypass the bidding process. It may be
that the Obama administration wants to use Sun products, but they have
to adhere to policy. It actually looks like RIM and General Dynamics
have the security that the NSA requires. He likes his blackberry.

Sun has canceled several contracts that it had with the government in
2007. They did not give a reason for the cancellations. I hope this
has been resolved.

Sometimes a 'Crackpot' is needed. Serious change needs to occur at Sun
quickly.

Aaron