With its new software strategy, the tech giant promises not just to stay afloat but change the entire software landscape.Sun Microsystems, Inc., well-known for its Java software, announced on September 29, this year, that it expected a larger loss in the current first quarter than market had expected.
Sun
Microsystems, Inc., well-known for its Java software,
announced on September 29, this year, that it expected
a larger loss in the current first quarter than market
had expected. The company warned that it would have
to record a $1 bn tax charge and revise its previously
reported fourth quarter results to show a loss. It further
added that it would take the $1.05 bn charge in the
fourth quarter of the fiscal 2003 to write down the
value of tax credits carried on in its balance sheet,
because of its slower return to profitability. In fact,
there is nothing new about this gloomy outlook, as the
company continues to disappoint stock markets with its
poor performances for the successive quarters over the
last two years, except the fact that it is worst than
what Wall Street analysts had expected.
The
recent announcement, in a way, just vindicates the trouble
the once high-flying technology behemoth has been in
after the burst of the dotcom bubble in 2000. Sun's
EPS (Earnings Per Share) has been in the red for seven
out of the last nine consecutive quarters; on the other
two occasions, the EPS were $0.02 (4QFY'02), and $0.00
(3QFY'03). Disappointed over the company's continuous
failure to re-establish itself in the technology big
league, the markets have hammered down the company's
stock price to below $4 from its all-time high of $64
in 2000, a loss of about 95%. Does all this signal the
end of the road for a company that always dreamt of
dethroning its archrival Microsoft?
It
doesn't look so, at least for the moment. Just about
a fortnight ago before it issued the profit warning,
the company revealed a new software-pricing strategy
that promises to revolutionize as well as redefine the
business model of the software industry as a whole.
Simply put, Sun wants to do to software industry what
Dell did to hardware industry commoditize it. The company's
objective is twofoldcut costs and simplify software
applications. While that looks a little overambitious,
or at least what its rivals believe, industry experts
forecast that the industry could gain significantly
even if Sun fails in its resurrection bid. |
