Sun's missing mojo: MIA until when?

The CEO keeps painting a sunny picture. Then come more losses, layoffs, and letdowns.

Steve Jobs may be the best in the business at mesmerizing a crowd, but Jonathan Schwartz of Sun Microsystems rates consideration as a very serious No. 2.

When it comes to pitching his company, Schwartz is the sort of articulate and passionate CEO that boards covet in these extra-PR-conscious times. Is he all that good? Put to the test, I think he'd have decent odds of convincing a zebra that stripes were yesterday's fashion.

Jonathan Schwartz: What does he know that the others don't? Stephen Shankland, CNET News

But while Schwartz is steadfast about Sun's ability to achieve great things, the big difference is that Jobs sells cool stuff that its customers consider to be so much better than that offered by the competition. At Sun, well, it remains a slog.

The company just last week announced it had lost $209 million in its fiscal second quarter on an 11 percent drop in sales. (If you subtract the special charges, Sun actually would have finished with a 15-cent-per-share profit.)

The earnings report came as a mild upside surprise on Wall Street, which had feared worse after the financial sector's meltdown during the fourth quarter of last year. Still, sales remain headed in the wrong direction as the company has now suffered year-to-year declines in each of its last four quarters. It doesn't help that Sun is getting squeezed from opposite directions with IBM and Hewlett-Packard at the high end of the server business and Dell (and HP again) on the low end.

So I was especially curious how Schwartz would deal with current events when he presented a status update on Sun's business Monday morning. What can I say, but the guy still has the touch.

This was a textbook Jonathan "special" where you come away dutifully impressed at his ability to peer through the clouds. As his Schwartz's wont, he liberally dropped mentions of (unnamed) bigwigs at this or that (unnamed) major "financial institution" assuring him that they understood the importance of investing in (presumably, Sun) technology in order to stay ahead.

And there was no shortage of telling anecdotes. At one point, Schwartz related how a "leading" technology decision maker with one of the world's largest financial institutions shared this morsel: Yes, it's reexamining what it spends. Who isn't? The more important intimation: this institution intends to accelerate spending in other areas where it thinks there will be opportunity.

All that was prelude to Schwartz's main argument that technology spending will figure as "a critical part" of the economy's recovery (whenever that might take place.)

What followed was a brilliant disquisition on the role of innovation during times of crisis and how "cloud (computing) was fast becoming the "one conversation people want to have across the world." (I thought it was Christian Bale but let's not quibble.) Schwartz's line of argument naturally fed into a scenario marked by sharp demand for more servers and storage, the two product areas which coincidentally pay the bills at Sun.

Truth be told, it was a compelling performance. I just wonder how long it's going to take before the story line ever jibes with facts on the ground. Panglossian optimism has its place, but Sun's CEO insists on painting a sunny picture that never quite takes shape as envisioned. Indeed, he's been painting the cloud computing picture for years now. Then come more losses, layoffs and let downs. Seems that it's been this way since the dot-com bubble burst.

I'm not arguing Sun's in any danger of going under. In fact, it can probably fare quite nicely as a (much) smaller, open-source software company. But that doesn't fit with Schwartz's vision for Sun. And while I am keeping my fingers crossed, the repair of the economy will take quite some time. So at what point do we declare his vision a pipe dream and just move on?

 

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