Sun’s chairman undaunted by stock market woes

While turmoil in the financial markets has investors running scared, Sun Microsystems Inc.’s Chairman and CEO Scott McNealy prefers to ignore the ups and downs of the financial markets. Instead, he focuses on his company’s performance.

“I can’t figure the stock market out,” McNealy said during an interview Tuesday at Sun’s offices in Santa Clara, Calif. “I think it’s wacky. I have done well with a long-term strategy and will continue being a long-term investor.”

When McNealy talks about this long-term approach, he refers not only to his personal financial strategy but also to the one he has outlined for Sun. The company churns out servers and profits handily from its efforts, and McNealy doubts that the disappearance of Internet companies will hurt Sun’s revenue stream.

“There will be consolidation in the technology markets,” he said. “If 99 companies fail, and we get one AOL or eBay, it is a huge win.”

Turmoil in the financial markets has investors scampering about trying to find the next great success story and struggling to avoid obituary notices in their portfolios. The infamous, chaotic nature of tech shares, in particular, can make investors edgy about placing bets on even the most traditional players in the IT market. But McNealy said that neither the death of the dot-coms nor the struggles of rivals like Hewlett-Packard Co. will impact Sun’s profitability over the long-term.

McNealy has long been a proponent of more consistent, simplified systems running both back-end and front-end applications. He expects the high-tech market to move more toward the model set by phone companies. He said it would be ridiculous for a telephone switch to generate high levels of consistent performance with parts made from a myriad of vendors. McNealy wants to copy the telecommunication market’s example and move away from an IT world that requires companies to mix and match parts in their back end from numerous vendors.

Sun’s strategy is to make chips, servers and software, all anchored by Sun’s Solaris operating system. As other vendors try to fill the service and application gaps in other areas, McNealy said he was satisfied to see them battle and set themselves up for possible failure.

One area, in particular, where McNealy expects to see some fallout is in the storage market. Sun acquired a storage applications vendor on Monday and looks to add the company’s products to its other storage offerings. With this in mind, McNealy launched an attack against storage stalwart EMC Corp., which risks failure because, according to him, it can’t offer as complete a package of products as Sun.

“Doing separate data storage is not a smart move,” McNealy said. “It is a losing battle.”

At Oracle’s weeklong Open World event in October, Oracle had both a Sun-sponsored and an EMC-sponsored day. While Oracle and Sun have a very tight relationship, Oracle seemed in support of EMC as well on a number of initiatives.

McNealy, however, charged that if one gives Oracle Chairman and CEO Larry Ellison a few beers, he would likely voice his commitment to Sun products without hesitation. McNealy, likewise, said that while his company works with Oracle rival SAP AG, he would do the same about Oracle, clearly, even without the beers.

Sun Microsystems, in Palo Alto, Calif., can be reached at

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