Sun CEO Scott McNealy spoke recently at the Sun annual investors meeting, admitting that the company was disappointed in the previous fiscal year, but remained confident in a better 2004. McNealy pins the success of Sun on the growing trend to connect everything digital to a computer network.

Sun's numbers for fiscal 2003 disappointed many; revenues dropped from $12.5 billion in fiscal 2002 to $11.4 billion in fiscal 2003. McNealy signaled just how unhappy the company was with these numbers: "We obviously are not pleased with the entirety of our fiscal year last year. We expect to grow and to make money." In an attempt to combat the business slowdown, Sun has been forced to cut jobs. In fiscal 2001, Sun had 43,683 employees. By the end of fiscal 2003 that number had dropped 17 percent to 36,068.

McNealy did point to some recent bright spots in both recent company financials and product releases. Sun managed to improve its gross margin percentage by 4.9 percentage points on its servers and storage gear in fiscal 2003. Selling, general and administrative costs were also reduced 12.5 percent in that period.

Sun's most significant recent achievement is its consolidation of 225 software products into three overarching product offerings for corporate and government customers. Sun also managed to hold on to $5.74 billion in cash in marketable debt securities. "It was not a complete disaster by any stretch of the imagination," McNealy said. "And I think we protected the shareholder assets very aggressively in the last fiscal year."

McNealy also signaled the company's intent to pursue more recurring revenue, such as that derived from its services business. Currently, Sun receives only about one-third of its revenue from recurring sources, which include license contracts, services and such.

For more information on the shareholder conference as reported by Reuters, visit:

http://www.reuters.com/newsArticle.jhtml?type=topNews&;storyID=3817663

For slides from the presentation, see:

http://www.sun.com/aboutsun/investor/financials/2003_ASM.pdf [...read more...]

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