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Sun Microsystems, Inc. (NASDAQ: JAVA) wants to make yet another strategic change in its core business, according to CEO Jonathan Schwartz. Schwartz said yesterday that the open-source and server company plans to increase its focus on storage products and services using an internal reorganization to do so.
For this, Schwartz wants to merge the server and storage business units into a single unit focusing on storage and server convergence. In effect, Sun wants to sell and service more storage systems to make up for the lack of margin in its server business. At least, that's how many are reading this move. Since acquiring StorageTek years ago, this move was anticipated. It's now here.
In addition to making StorageTek's product lineup more profitable to the company, Schwartz also may be making the move to fall in line with "virtual server" trends in the information technology field. In a sense, customers don't care about buying servers or storage, but are interested in possibly "renting" a virtual server and storage system that acts as a single unit. This is precisely what Sun will try to push to customers as it slowly dumps aging mainframes.
According to Schwartz, Sun "wants to be in a position to innovate on its [customers'] behalf, at the system level, beyond the boxes -- across blades [servers], racks, disk and tape." Let's see if this recent internal reorg and change in customer philosophy will have a positive revenue effect for Sun -- something it desperately needs.
Barron's Online's (subscription required) "Inside Scoop" section reported that on Friday, two days after the stock dipped to $12.07, a 6-year low, Borders Group Inc (NYSE: BGP) CEO George Jones bought 50K shares, his first open market purchase since joining the retailer.
The Financial Times (subscription required) reported that Citigroup Inc (NYSE: C) CEO Chuck Prince is waiting for a review of the company's $3.3B in losses and writedowns in its banking business for Q3 before deciding whether to fire executives as a result of the poor performance, according to senior Citigroup executives.
Yahoo Inc (NASDAQ: YHOO) said it was considering selling Kelkoo, the online shopping comparison service that it acquired in 2004, admitting the acquisition did not pan out as planned, reported the Financial Times.
WEBSITES:
Sun Microsystems (NASDAQ: JAVA) is going to combine its storage and server product teams to create a new converged group called the Systems team, Sun Microsystems CEO Jonathan Schwartz wrote in his blog.
Investors do their best to increase their wealth. They buy a stock or a bond with the best of intentions, but many of their picks don't work out. Here are some of the most common mistakes investors make and how to avoid them.
Mistake: Buying a stock on a recommendation from a friend. The assumption here is that the friend did the research and knows about the stock. The richer the friend is, the more weight the tip has. What you don't know is whether the friend has bought 100 shares or 10,000 shares and how much of his or her wealth is tied up in the stock. The more stock he or she owns, the more they must believe in the stock. You also don't know how much, if any, research the friend did. Maybe he or she got the tip from another friend, and you're only one of many in a "tip" chain. Maybe you're the last one to get the tip.
MOST NOTEWORTHY: Sun Microsystems (JAVA), FMC Technologies (FTI), TorreyPines (TPTX), and Exelixis (EXEL) were today's noteworthy initiations:
Sun Microsystems Inc (NASDAQ: JAVA) was initiated with a Market Perform at BMO Capital, which views the shares' risk/reward as favorable around $5.
FMC Technologies Inc (NYSE: FTI) was initiated with a Buy by Jefferies, which believes strong subsea fundamentals will drive strong earnings by the company.
TorreyPines Therapeutics Inc (NASDAQ: TPTX) was initiated with a Strong Buy at JMP Securities, which said PhIIb data in Q4 on the company's tezampanel drug could increase investor conviction on the first in-class drug.
Exelixis Inc (NASDAQ: EXEL) was initiated with a Buy by Lazard, which believes Exelixis has a promising pipeline.
OTHER INITIATIONS:
Fortune Brands Inc (NYSE: FO) was assumed with a Neutral rating by JMP Securities.
A funny things happened yesterday. Shares in Sun Microsystems (NASDAQ: JAVA), which have been trading up for two weeks, took at dope mid-day. The drop was fairly sudden and happened just after noon.
That would have been the same time that Sun announced it would be selling Microsoft (NASDAQ: MSFT) Windows pre-installed on a number of its servers. According toThe Wall Street Journal, Redmond will get a license fee for each server. This was an odd turn of events since Windows competes with Sun's own Solaris system.
Both companies pledged that their server software would interact and work with new virtualization technologies that allow processing to be shared across servers and cuts hardware cost.
What happened to Solaris then? According to Sun, it would become a de facto standard for server operating systems, but the market wasn't buying it. The reason Sun's shares fell is probably because the announcement was a tacit admission that Solaris cannot pull Sun's growth out of the mud.
In the last quarter, Sun's revenue was flat. Of course, Sun does not have to pay Microsoft license fees on Solaris, so margins will be cut each time Windows is shipped on a Sun server. Sun will now have to pay out money for the privilege of using Windows. The market knows that.
But, it is better than hitching the company's wagon to a star that is setting.
AMD (NYSE: AMD) will release its powerful new Barcelona chip today. The chip is a "quad core", meaning that it has four processor on one platform. The new product is aimed at high-end servers and PCs and is being shipped in products from Dell (NASDAQ: DELL), HP (NYSE: HPQ) and Sun (NASDAQ: JAVA).
Larger rival Intel (NASDAQ: INTC) has taken much of the server market away from Advanced Micro over the last year or so. Barcelona is a bid to get that back. Nathan Brookwood, an analyst with Insight 64 told Reuters, "The stakes here are for AMD to staunch the erosion in its marketshare and to once again go on the offensive against Intel."
For Advanced Micro, it may be too late. The company has been left for stock market "road kill" by investors. Shares of the company were above $42 in early 2006. They now change hands below $13. The company took on a great deal of debt when it bought chip company ATI. Wall Street has been concerned that AMD will have trouble paying down that debt. The No.2 x86 processor company has also lost its top two sales executives in the last month.
The markets will know fairly soon if Barcelona is gaining share. Several research firms track chip sales in PCs and servers. Intel has already introduced its own "quad core" products.
If Barcelona does not do well, it is likely that the company will see major management changes and that ATI and other businesses may have to be sold off. Things are that dark for Advanced Micro.
Sun Microsystems (NASDAQ: JAVA) followed the announcement of its ticker symbol change with a plan for a 1-for-4 reverse stock split [subscription required]. That would put the stock in the $20 range at current prices.
It won't matter. Sun's shares are off about 10% over the last six months while larger rivals Hewlett-Packard (NASDAQ: HPQ) and IBM (NYSE: IBM) are up more than 20%.
Management at Sun believes that a low stock price, under $10, makes it appear as if the company was still "struggling to overcome its post-dot-com era slump." Perhaps a higher stock price could change that perception in the eyes of investors. As management said to The Wall Street Journal, competitors pointed to Sun's stock price to sway "naive customers who might not be able to look beneath the surface.''
Sun is underestimating the intelligence of enterprise server buyers. They do not buy Sun products not because of its stock price but because they can get a broader product range from companies like HP. Sun has had no success in getting robust demand for its products. In the last quarter, revenue was flat with the same quarter a year ago with only cost cuts improving the bottom line.
Sun has tried almost everything now from share buy-backs to ticker changes.
The company's problem is that it has no evidence of a real recovery to point to.
The Netherlands is using competition and a small dose of regulation to pursue what many in the U.S. hunger to achieve: health insurance for everyone, coupled with a tighter lid on costs.
Whether they're waiting out the housing storm, or smack in the middle of it, an increasing number of Americans are choosing to rent, not own. And that's good news for landlords and investors.
Foreclosures and risky lending have dogged the housing market. As lenders have tightened their standards, attractive mortgages have grown harder to come by. Yet rental fundamentals have remained strong, especially in the 10 areas that made our list of Best Markets for Landlords.
Most nonsugar sweeteners will taste fine in your tea or lemonade. But use some of them for baking a cake, and you could have a real flop. These are the findings of Consumer Reports tests of 13 lower-calorie and no-calorie sweeteners, which we added to drinks and used to bake cookies and cakes, following package directions. We found that no sweetener does it all and that no-calorie products didn't bake as well as lower-calorie sweeteners: In other words, you can't really have your cake and no sugar too.
Glue makers have enlisted snarling rhinos, glaring gorillas, and sumo wrestlers to tout their promises of "incredible strength," "truly all-purpose," and "Glues whatever. Bonds forever." But those claims didn't stick in our lab tests. Most of the multipurpose adhesives, superglues, epoxies, and wood glues that we tested were adequately strong for their intended purpose. But no single adhesive worked for everything -- and a few barely worked at all.
What could be a better antidote to market volatility than a mixture of high-yielding blue chips? How about the ten top payers in the Dow Jones industrial average, better known as the Dogs of the Dow? The top-yielding blue chips make faithful companions during unpredictable times, but some will be better company than others as the market volatility subsides.
5 luxe limited editions These days carrying a Gucci bag doesn't mean you're special -- or ever particularly unique. Once the sole province of the elite, luxury has gone mass market. So luxe retailers are getting creative, ginning up one-of-a-kind items that recapture exclusivity. http://money.cnn.com/galleries/2007/news/0708/gallery.luxury_premium/
Sun Microsystems (NASDAQ: JAVA) has been on a wild ride in recent years. The company has been battered in the corporate space as cheaper hardware and operating system alternatives (like Linux) cropped up and stole profitable market share from the Silicon Valley stalwart. When company founder Scott McNealy handed the reins over to then-CEO Jonathan Schwartz, many investors did not know what to think. By now, they probably do.
Sun has delivered profitability for three straight quarters after making its once-proprietary Solaris operating system an open-source product, and it's mirrored a good deal of IBM's move to a revenue model built on services instead of software and hardware. With computer server hardware still rapidly moving into the commodity stage (if it's not there already), this move could not have come any sooner for Sun. Schwartz knew it, and acted in time.
Schwartz presented Sun's plans for cost initiatives and growth plans for the new fiscal year early this morning in New York City while many investors and Sun pundits watched and listened with a careful and scrutinizing eye (and ear). With Sun shares up over 6.5% in just the last week, what was the chatter from today's announcement? The meeting began at 8am EST today, and transcripts and audio downloads are available here.
The design of electronic hardware components has become so intricate a process that engineers use digital simulation products to avoid long verification cycles and the expense of manufacturing multiple prototypes. A leading provider of design automation software and systems is headquartered in Wilsonville, Oregon.
Mentor Graphics (NASDAQ: MENT) provides electronic design automation software and systems that engineers use to design, analyze, simulate, model, implement and verify the components of electronic systems. Firms use Mentor's software to produce such products as computers, routers, and cellular handsets. The company also provides consulting and support services. Mentor has business partnerships with Hewlett-Packard (NYSE: HPQ) and Sun Microsystems (NASDAQ: JAVA).
The firm pleased investors last week, when it reported Q2 EPS of 15 cents and revenues of $205.7 million. Analysts had been expecting 8 cents and $200.2 million. The CEO noted strength across all of the company's system related product lines. Management also guided FY08 EPS to $1.02 (98 cent consensus), FY08 revenues to about $860 million ($856.04M consensus), FY09 EPS to $1.22 ($1.15 consensus) and FY09 revenues to about $920 million ($912.44M consensus).
The theory goes that Linux, the open-source operating system, will replace Windows as the preferred software to run servers. Over time, the cost advantage of software created by a community of developers would overwhelm the pricey Microsoft (NASDAQ: MSFT) product.
So much for theory. Windows is actually taking share from Linux in the server market. According to TheStreet.com "Microsoft picked up 2 percentage points, bringing its market share to 67.1% of servers shipped during the second quarter." Windows server revenue hit $5 billion in the second quarter compared to $1.8 billion for Linux.
The one operating system that did not do well in the last quarter was Unix, which is marketed by Sun (NASDAQ: JAVA) among others.
In some ways the figures are not a surprise, despite the cost advantage of Linux. The large enterprise marketers of the software, Novell (NASDAQ: NOVL) and Redhat (NASDAQ: RHT) have never become large companies.
Linux still operates under the threat of patent litigation. Microsoft has claimed that the open-source software violates several hundred of its patents.
Big enterprises shy away from products with potential IP problems, and that may be Microsoft's biggest weapon.
Sun Microsystems (NASDAQ: SUNW) volatility elevated into 9/5 financial analyst meeting.
SUNW is flat at $4.86. SUNW, which will change its symbol to JAVA on 8/27, will have an analyst meeting in New York on 9/5/07. The company has announced a $3 billion stock buyback on 5/16/07. SUNW recent market cap is $17.3 billion. SUNW over all option implied volatility of 45 is above its 26-week average of 38 according to Track Data, suggesting larger price risk.
RACK, a provider of servers and storage products, is recently up $0.65 to $12.62 on unconfirmed and renewed deal speculation. SUNW & DELL have been frequently chattered as interested in RACK. RACK call option volume of 2,690 contracts compares to put volume of 250 contracts. RACK September option implied volatility is at 47, October is at 51 and December is at 56, above its 26-week average of 55 according to Track Data, suggesting non-directional and less price risk.
Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Dell, Inc. (NASDAQ: DELL) has a desperate need for good news, as sales are not where they need to be for its shiny new products and the internal accounting scandal has the company mired in a mess (still). Well, that hooray sound you hear coming from Round Rock, Texas is probably from Dell's marketing and sales team for larger server computer systems. The world's second-largest computer maker managed to take the lead in the second quarter of 2007 in terms of overall large computer server sales growth.
Dell edged out rivals IBM Corp. (NYSE: IBM), Hewlett-Packard Co. (NYSE: HPQ) and Sun Microsystems, Inc. (NASDAQ: SUNW) -- no small feat at all. How did Dell manage to grow faster than all these well-placed competitors? It came down to how a new business strategy played out in the brutal market for supplying large servers to midrange businesses and large corporate data centers. Result: Dell's sales in this segment soared over 20% according to industry analysis firm IDC.
Dell still remained down the chain in fourth place when it came to overall server computer market share. Dell grew faster than its competition by delivering (and marketing) more energy-efficient machines using both Intel Corp. (NYSE: INTC) and AMD, Inc. (NYSE: AMD) chips. Additionally, Dell's hiring of former Solectron CEO Mike Cannon gave quite a boost to the company's supply chain and logistics operations in terms of efficiency.
Reuters reports that Paris Match magazine was told by a leading executive at France Telecom several companies were in talks with Apple Inc. (NADSAQ: AAPL) over marketing Apple's iPhone in Europe. While a deal wasn't reached yet with France Telecom's mobile unit Orange, the Financial Times Deutschland reported earlier this week that Deutsche Telekom's mobile phone unit, T-Mobile, had agreed to a deal. The deal, according to the magazine, includes T-Mobile giving Apple 10% of the revenue it makes from calls and data transfers by customers over iPhones. O2 unit of Spain's Telefonica is also said to have agreed to a deal with Apple.
Meanwhile, Apple has a month left to achieve Jobs' stated goal of selling 1 million iPhone units by the end of the quarter (Sep. 30). Analysts are only slightly more bullish than that. Still, some expect sales to reach 1.5 million units by the end of the quarter.
As Ford Motor Co. (NYSE: F) CEO Alan Mulally about to enter the second year at his job, he said yesterday that volatility in global credit markets was a concern in its disposal of British luxury brands Jaguar and Land Rover. Still, Mulally expects the process to continue at current pace of interest. Also referring to the automaker's plan to turn around the company, Mulally said current U.S. economic conditions were a "headwind."
Nokia Corp. (NYSE: NOK) handsets, Nokia S60 , will carryMicrosoft Corp.'s (NASDAQ: MSFT) Windows Live suite of Web-based services in 11 countries, mostly in Europe. Initially a free trial, the services will then be asked to pay a monthly fee in some markets.
According to IDC, in the server computer market, Dell Inc. (NASDAQ: DELL) had the fastest revenue growth in the second quarter, outpacing International Business Machines Corp. (NYSE: IBM), Hewlett-Packard Co. (NYSE: HPQ) and Sun Microsystems, Inc. (NASDAQ: SUNW). Dell's rrevenue from the sales of servers jumped 20.2% but it remained in fourth place in overall share of the market at 11.6%. IBM's server-revenue grew 6.4% to $4.07 billion as it kept the to top spot in market share with 31%. HP's server revenue rose 8% to $3.71 billion, keeping it in second place with 28.2% of the worldwide server market. Sun Microsystems also kept its third place with server revenue rising 5.6% to $1.71 billion and a 13% of the market.
Sun Microsystems (NASDAQ: SUNW) has tried to get into several new businesses as its revenue growth has slowed. It recently said it would sell its new chipset to competing server companies.
But, the most promising Sun initiative has been offering is its Solaris operating system to run on the hardware of other companies. Yesterday IBM (NYSE: IBM) took the bait (subscription required) and said it would offer Solaris on its servers along with Microsoft (NASDAQ: MSFT) Windows and Linux.
IBM has its own operating systems, but they are not as popular as Solaris.
The announcement is an important step forward for Sun. It needs to sell its software on other company's hardware because its own hardware sales have slowed. In the last quarter, Sun's revenue was flat The company's shares traded near their 52-week low yesterday and closed at $4.72, well off their 52-week high of $6.78.
Sun has been able to swing to a small operating profit because it has cut so many people. But, it still has to compete with much larger rivals like Hewlett-Packard (NASDAQ: HPQ) and Dell (NASDAQ: DELL) for server sales. That may be a losing game.
Investing in Ontario: Research in Motion (RIMM), Nortel Networks (NT), and IMAX (IMAX)
The Fed's job isn't getting any easier
EMC quarterly profit up 77%
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