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2HRS2GO: Sun keeps rhetoric down and profits up

If you had never heard Sun Microsystems (Nasdaq: SUNW) executives before yesterday's fourth quarter conference call, you might have thought they sounded heavy on Competitive Hot Air:

  • "It seems every day HP and IBM are also talking about Sun, and that's how we like it."
  • "Yesterday, just hearing little tidbits about (network storage rival) EMC's earnings call, we know we are making significant progress for them to spend as much as they did talking about Sun."
  • "You see our competitors all trying to announce new things, WebSphere or Microsoft.Net or whatever. We've had it, we've been developing it, we've got this with Solaris, Java, Jini and iPlanet and Forte, all the rest of it -- we really have created a Sun.Net platform today."
  • "I don't about the rest of the Unix server business, but certainly Solaris is doing well."
  • "One thing I will guarantee you is (growing) market share."
But to anyone who has paid attention over the past few years to CEO Scott McNealy and his cohorts, the latest talk wasn't merely toned down -- it was downright gentle.

No longer do you hear cheapshots at half of the technology world. Sure, you still had talk about "disruptive technology" and "stunning market share gains over our nearest competitors." But this is Sun we're talking about; you can't expect braggadocio to disappear entirely.

"We don't hype -- well, ok, not too much..." began one sentence from CFO Michael Lehman.

Not too much at all these days. Sun now says it wants its numbers to do the talking. Those figures speak with a loud voice.

The company may grate on your ears as it touts its success at the expense of rival divisions from Hewlett-Packard (NYSE: HWP) and IBM (NYSE: IBM), but it's hard to complain about when the company's business accelerates every quarter and seemingly every year. And it's coming off a large base: $15.7 billion in annual revenue, with roughly 30 percent growth expected over the next fiscal year.

"Instead of engaging in what seems to be the day-to-day computer rhetoric, we chose to let our numbers do the talking and our salespeople do the selling," said COO Ed Zander.

Rather than tossing Java in Microsoft's face, Sun seems to be gunning for its real rivals -- other Unix vendors. McNealy, Lehman and Zander spent several minutes yesterday talking about IBM, HP and EMC -- come to think of it, who's really talking every day about who? -- and mere seconds on Microsoft.

Focusing on immediate competition led Sun to its improved growth. Instead of wasting time and energy thumbing its nose at Bill Gates, Sun is back to pushing real products.

Lately analysts have feared IBM and HP might use their latest offerings -- which outperform their UltraSparc counterparts, according to many observers -- to cut into Sun's server lead. But Sun's various software initiatives apparently form a package that people want, at least judging by the company's sales performance.

And that was the real point of past noise about Java and "all the rest of it". Sun never saw itself as competing directly with Gates' software behemoth, but by spewing anti-Microsoft venom, McNealy generated buzz and easy publicity.

Corporate customers now seriously regard Sun's software and services, which in turn spurs sales of servers, workstations and storage systems.

Having reached that point, Sun has zeroed in on the companies that present real threats, and the silly rhetoric has eased. Forget the holy wars, time to focus on the top and bottom lines.

It works both ways: restraining the Baloney Quotient boosts revenue, and that increased revenue in turn obviates the need for B.S.

So let's hope Sun keeps growing and SUNW shares keep rising. As long as that happens, the company will stifle its hot air. 22GO

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