Sun Cuts 6,000 as Wall St. Cloud Spreads to Tech
Sun Microsystems appears to be wedged between a rock and a hard place. The company just announced plans to lay off as many as 6,000 workers.
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Regency Park, Australia
#1 Nov 16, 2008
As a former employee, having internal knowledge of SUN's management processes, I find this quite idiotic and abrupt. Sure the share price may increase over the short term, but over medium and long term it will be the same. Look at the response of the 4to1 share exchange.$20 quickly turned to $4.50 over the past six months or so.
One of the key reasons is that SUN fails to place them selves well with Wall Street and market strategists alike, they fail to explain to the market their position and fail to convert the momentum gained from the products they buy into real dollars. Why???
Lets look at the key products, one of the best Enterprise class OS, with good market share, only getting better with the push of Open Solaris. Since the purchase of STK, and in addition to market leader technology sourced from Engenio and HDS, they have one of the best line ups in storage especially tape/tape library technology and mainframe disk, only lacking in NAS capabilities, which is being addressed with the new Amber Road and Open Storage initiatives. Add to this the already impressive systems portfolio and you should have a recipe for expected success. Why them does SUN not have it?
One of the reasons, is that no company makes money by giving away key enterprise products, and no company makes money by purchasing other companies that make no profit from their products. Sure the market share may increase. One can imagine the market share if Microsoft were to give away MS Windows Server, XP/VISTA, SQL and Exchange, I for one would be able to employ all those tools in a company and pay nothing for them. It just does not make sense.
If you take a look at the products/companies that SUN has purchased recently, one would find that only a small number of them have products that are viable profit makers. with the ex-StorageTek products, no one has a Tape/Tape library technology line like SUN, with additions to Mainframe storage, both are key IBM competitors. MySQL was probably one of the worst purchases, way too expensive and its given away free...At what cost??? 5000 jobs?
The problem with SUN is not then the product set, for it is very competitive and built to hight standards, while top quality support services are also provided. So, if it is not the product set, quality, support and serviceability, then what is it?
It is my believe that the issue with SUN is a corporate management one, the lack of adequate strategic thinking, lack of vision, unable to defy and define the market when reasonable to do so. The strategies for purchasing some of these companies are at best doubt-full. It feels like SUN is looking for the "big one" to drop. The product that will take SUN to $100/share, something like Apple and the iPod. Buy enough products and you may get a hit...
It may be reasonable to loose some people, but I would recommend for them to start with the corporate, strategy and marketing level and even the board. SUN will not benefit from cutting jobs in, sales, services, R&D and partner management. Profits gained through cuts here today will by annulled by re-hiring costs tomorrow.
So, get real SUN...Re-trenching people is not the only solution, start re-thinking where you want to go, get some new age thinking into the corporate levels and on the board. Stop following Wall Street trends...
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