Sun Vs. Microsoft Essay, Research Paper
Sun Microsystems, Inc.
Introduction
By 1998 Sun had become a global Fortune 500 leader in enterprise network computing with operations in 150 countries and generating $8 billion in revenues. Sun?s competitors in the technical markets were primarily Intel, Hewlett-Packard (HP), International Business Machine (IBM), Compaq Computer Corporation (CPQ) and Silicon Graphics, Inc. (SGI).
The information technology industry, the market for Sun?s services and products, was extremely competitive in 1998. The industry is characterized by rapid, continuous change, frequent performance improvements, short product life cycles, and price reductions. The good reputation of Sun Microsystems will continue to serve the company well. Sun was the leading provider of UNIX-based servers. Java helped increase sales.
Products & Services
Sun Microsystems is a company that is at the top of their game. Offering products with unmatchable capabilities, Sun has concentrated on the mission that its CEO, Scott McNealy has upheld since the beginning, ?The Network is the Computer.? Since its founding in 1982 and the beginning of McNealy?s tenure as president in 1984, Sun has continued to grow as its products give the customer abilities that no one else offers. The vision that Scott McNealy has adopted has been the focus of the company for years. Sun aims to make all computers compatible with each other over a network. Computers, when manufactured by different companies, can run on several different operating systems yet be able to work together. The Sun products described below attempt to accomplish the mission that Sun has set to facilitate communication on a global level.
Enterprise Servers
Sun Enterprise servers deliver unmatched scalability so the customer can concentrate on expanding his/her business without worrying about how his/her information systems will keep up. From the workgroup to the data center, Sun Enterprise servers give their customers all the power they need to dot-com their business and gain competitive advantage.
Network Storage
Sun is redefining storage for the dot-com age. Today’s enterprise requires the right balance of compute, network, software, and storage capability to achieve maximum performance. Sun’s Intelligent Storage Network architecture offers that balance. And it provides information sharing, protection, and management across a variety of platforms. Furthermore, Sun provides outstanding scalability, investment protection, and a building-block approach for incremental growth.
Desktop Systems
With supercharged processors, high-bandwidth networking, accelerated graphics, and outstanding application performance, the Sun Ultra series brings supercomputing power to the desktop. Sun offers PC compatibility. Java Station network computers require no desktop administration, making them ideal for companies looking to reduce total cost of ownership.
Java Technology
The most talked about technology of the dot-com era has also become the most widely used. Developed by Sun, Java technology addresses many of today’s most pressing problems: complexity, incompatibility and security, and has proved invaluable in cutting costs and opening new dot-com business opportunities. Sun Microsystems offers the ?Road to Java? program, with more than 75 authorized Java Center service locations worldwide, can guide the user from evaluation to pilot programs to enterprise-wide implementation.
Solaris Software
Sun delivers the perfect platform for network computing: Solaris software. It starts with a 64-bit operating environment and extends to server products that provide mainframe-class reliability, complete PC interoperability, and comprehensive Internet services. Solaris software gives the ability to support multiple-terabyte data warehouses and thousands of users. Sun provides comprehensive enterprise management tools, industrial-strength security solutions, and e-mail that works on a global scale. This combination of qualities provides a solid foundation needed for continuous connectivity. Such a foundation is necessary in the dot-com world, where downtime can cost a company thousands, or even millions, of dollars.
Forte Development Tools
Sun offers a complete, end-to-end solution for quickly developing high quality, entry-level to enterprise-class applications for the Solaris Operating Environment, Linux, UNIX, and Microsoft Windows environments. It also includes a new, robust, Integrated Development Environment (IDE) that supports many languages to make you more productive than ever.
Professional Services
Sun offers an integrated portfolio of services to help plan, design, implement, and manage innovative dot-com solutions. Their consulting and integration experts work closely with the customer to align their information systems with their business goals.
Support Services
With the world’s largest UNIX service organization, supporting more than one million systems, Sun delivers ?mission-critical? support at all times. Additionally, Sun VIP program resolves complex problems and eliminates finger pointing through cooperative agreements with leading software vendors.
Educational Services
To increase the efficiency of the customers? staffs, Sun provides design, training, consultation, and management services tailored to their current skill levels. They offer courses for individuals and groups, at the customer?s place of business or in classrooms in more than 85 countries around the world.
Consumer and Embedded Devices
With their platform-independent Java technologies, Sun is extending the net all the way to consumer devices “dot-comming” everything from smart cards to wireless phones to touch-screen kiosks. To build this new generation of network-ready information appliances, manufacturers are turning to Sun for fast, low-cost Java processors, the lightweight Java OS operating system, and other enabling technologies so the customer can access the information he/she needs, anytime, anywhere using just about anything.
MicroElectronics
Sun?s UltraSPARC microprocessors accelerate multimedia and networking applications with their innovative architecture and VIS instruction set. They can be thought of as the high-performance engine behind the net, powering networked systems from routers to supercomputers. Java processors, with their high performance, small memory footprint, low power consumption, and low cost, enable revolutionary thin-client products from network computers to Web phones.
Telco Servers
In an era of convergence between telecommunications and Internet services, Sun provides solutions that can give the customer a competitive edge. The Telco product line ranges from stable platforms for network services to infrastructure components. Sun?s Netra products deliver complete, commercially available solutions from single-processor servers to fault-tolerant multiprocessing systems. They are constantly developing a full range of products to meet stringent Telco requirements for connectivity and storage plus innovative Java solutions that enable telecommunications companies and Internet service providers to deploy new breakaway businesses.
Java
Java, the programming language developed by Sun Microsystems, is known around the world. Many have heard of Java, yet few know what it is, or what it can do. It certainly has become a part of our everyday lives, existing in our mobile phones, televisions, and Internet browsers. Designed in 1990 as an embedded language for consumer electronics, it was later discovered to be an ideal interface to the Internet. In 1996, Netscape added Java support to its popular Navigator Web browser. The technology is still evolving, and today, most Java applets are simple animations, or user interactions. The future is brighter, promising full-blown applications over the Internet; imagine using Microsoft Office from your television.
A Java applet begins its life by being called by a Web page; the applet is embedded in the Web page. The Web browser then downloads the applet and runs it on your machine. The concept of being able to run applications on your system has been a major innovation from Sun Microsystems. The ability to run applications on your system has another significant advantage. When you view something that runs on a Web page, or is interactive, the work takes place on the remote computer and not yours. Java frees Internet resources, allowing the work to take place on the client’s system rather than the server’s.
If all applications were running on remote computers, the servers would be clogged up with traffic, and these would bring the entire Internet to a halt Java has been thrust into the spotlight with its language built on the principles of security and platform independence. Sun Microsystems has promised a “Write once, run anywhere” language created for an Internet
community comprised of different computer, hardware, and software configurations. The power to write programs that run on most everyone’s computer is revolutionary. For Internet applications, though, the value of platform independence degrades exponentially without strict, built-in security. Java provides this security, and has the power to change the way we compute.
Current Mission
The current mission focuses on their experience, understanding, innovation, cooperation, and commitment to their customers and products. With more than 17 years of experience on the forefront of network computing, Sun?s innovative leadership extends from the onset of the Internet to creating the world-renowned Java technology. They understand the fundamental needs of businesses to minimize complexity, processes, and expenses while maximizing productivity. Thus, they have created products that appeal to all industries, from education to retail. Their innovation offers workstations, servers, and high-speeds that redefine high availability. Sun recognizes their inability to ?be all things to all people.? So they built solid relationships with companies capable of providing the best products in their field. This cooperation brought together the best solutions available for customers. Their commitment is to provide not just innovative products but impeccable service and support. They are available 24 hours, 7 days a week to assist with technical questions via e-mail and/or toll-free calls.
Current Objectives
Sun Microsystems had a vision of creating an environment in which computers talked to each other no matter who built them. They used this vision to develop a mission statement that focused on experience, understanding, innovation, cooperation, and commitment. However, there is no single way to create an environment in which computers communicate with one another regardless of who built them. This would be more of a testing ground of on-going trial and error processes. Thus, Sun is not looking for linear growth. Linear growth could easily be defined quantitatively in how you move from point A to point B. Instead, they have created an entirely new industry and grown exponentially. This is largely due to their broad diversity of products. Since they recognize their uniqueness among most companies, Sun has not found the need to have any quantitative objectives. The closest they come to defined objectives is when Ed Zander, the President and Chief Operating Officer, says that they want to be the number one provider of technologies, products, and services that drive the Net economy. Fortunately, they have been extremely successful in doing this. They decided to capitalize on everyone’s need to communicate effectively and efficiently and have captured a diverse, yet somewhat undefined market. Unlike most companies, it would probably hurt Sun Microsystems to have measurable objectives because of the limitations they would then be subjected to.
In Hamel and Prahalad?s, Competing for the Future, there are definitive points that can help any company succeed. They must be open to changes in the market environment, utilize research and development to create future products, and be proactive instead of reactive to the environment. Sun Microsystems has fully maximized these attributes. As seen in their objectives, their definitions are broad enough to encompass may things, yet narrow enough to keep them focused on their business. This is important because they become extremely adaptable to the environment. Sun knows the value of research and development. Last year, they increased their research and development spending by 27% over the previous year. Lastly, they must be proactive, and accurately anticipate their customer needs and future technological trends in the industry. While they still must be reactive to environmental developments, they need to be the leader in cutting edge innovation. Sun knows it must compete effectively with current and potential competitors. Otherwise, it stands to lose revenue, profits, and market share.
Current Strategies
Sun Microsystems? strategy is consistent with their mission, as it always has been. They continue to strive to make the network available to every man, woman, and child. Sun sees its role as one of making most of opportunity, by delivering open, affordable, and useful products to help as many people as possible share in the power of the network around the world. Their current strategies assure that they can continue to adapt to the ever-changing commercial and social environment while still keeping efficiency and productivity high to minimize cost.
Sun?s competition offers several threats and opportunities. Sun has had to maintain a philosophy of continuous innovation in order to keep up with the market?s demands and the progresses of competitive enterprises. Sun invests heavily in Research and Development for this reason. Furthermore, in trying to progress at a faster pace than the competition, Sun has worked to create advance payments to its suppliers in order to assure expeditious service from their suppliers.
Sun is not a friend to dependence. In order to ensure that outside influences will not be devastating, Sun has ensured the diversification of its sales. As a result of this diversification, no customer of Sun?s accounts for more than 10% of their revenues. Because of these strategies, Sun has been able to obtain 26% of the market share in the United States.
Current Policies
Sun Microsystems main philosophy is to give their customers the ability to develop breakaway business strategies through the use of their products. Sun Microsystems offers their customers network computing products, solutions, and services. The company also realizes that information and its accessibility is key for any business to succeed in this day and age. Sun Microsystems is providing their customers with the technology, innovation, and partnerships needed to access information from anywhere and by any means, from any device they may use. Sun Microsystems policies and goals are based upon the existence of the network. They believe that the network is the foundation for customers to build their businesses through the use of Sun Microsystems products.
Its ?vision is for a networked computing future driven by the needs and choices of the customer. It is a vision in which every man, woman, and child has access to the collective planetary wisdom that resides on the network.? Sun Microsystems further realizes that the Internet is the gateway through which their vision and ideas would come to fruition. They see their mission as making the most out of the power of the Internet by their customers through the use of their products and services.
Board of Directors
The board of directors currently has eight members.
Scott G. McNealy
Chairman of the Board of Directors and Chief Executive Officer, Sun Microsystems, Inc.
Mr. McNealy is a Founder of Sun and has served as Chairman of the Board of Directors and Chief Executive Officer since April 1999. He was Chairman of the Board of Directors, President and Chief Executive Officer from December 1984 until April 1999, as President and Chief Operating Officer from February 1984 until December 1984 and as Vice President of Operations from February 1982 until February 1984. Mr. McNealy has served as a Director of the Company since the incorporation of the Company in February 1982. He is also a Director of General Electric Company.
James L. Barksdale
Managing Partner, The Barksdale Group since April 1999.
He was President and Chief Executive Officer of Netscape Communications Corporation from January 1995 until March 1999, when America Online, Inc acquired Netscape. From January 1992 to January 1995, Mr. Barksdale served as President and Chief Operating Officer of AT&T Wireless Services (formerly McCaw Cellular Communications, Inc.). Mr. Barksdale is also a Director of America Online, Inc., Federal Express Corporation, Liberate Technologies, Palm, Inc., The Robert Mondavi Corporation and Webvan Group, Inc.
L. John Doerr
General Partner/Managing Director, Kleiner Perkins Caufield & Byers
Mr. Doerr is also a Director of Amazon.com, Inc, Drugstore.com, Inc., FreeMarkets, Inc., Handspring, Inc., Healtheon/Web MD Corporation, HomeStore.com, Inc., Intuit, Inc. and Martha Stewart Living Omnimedia.
Judith L. Estrin
Chief Executive Officer, Packet Design, Inc. since April 2000.
From April 1998 to April 2000, she served as Chief Technology Officer, Senior Vice President, and Cisco Systems, Inc. She served as the President and Chief Executive Officer of Precept Software, Inc. from March 1995 to April 1998. Robert J. Fisher
Member, Board of Directors, The Gap, Inc. since November 1999.
From April 1997 to November 1999 he served as Executive Vice President, The Gap, Inc. and President, Gap Division. From November 1995 to April 1997, he served as Executive Vice President and Chief Operating Officer of The Gap, Inc. From July 1993 to November 1995, he served as Executive Vice President and Chief Financial Officer of The Gap, Inc. Robert L. Long
Independent Management Consultant
M. Kenneth Oshman
Chairman of the Board of Directors, President, and Chief Executive Officer, Echelon Corporation
Naomi O. Seligman
Senior Partner, Ostriker Von Simson, Inc.
Ms. Seligman is also a Director of Dun & Bradstreet, Exodus Communications, Inc., Martha Stewart Living Omnimedia and Ventro Corporation.
Top Management
The top management at Sun Microsystems serve as a crucial strength in the success, fortitude, and innovation of the company. Focus is a common term that falls from all of their lips. When asked what has driven their success in a short seventeen years, the following responses were given:
Scott McNealy, Chairman of the Board & Chief Executive Officer:
?Some companies change direction more often than I change the oil in my car. Sun?s focus is right where it?s always been: the Net.?
Ed Zander, President & Chief Operations Officer:
?Our focus is simple: Be the number one provider of technologies, products and services that drive the Net economy.?
Bill Joy, Cofounder & Chief Scientist:
??it?s always been about the network?that?s our focus.?
Greg Papadopoulos, Senior Vice President & Chief Technology Officer:
?All of our R&D?is dedicated to bringing the power of the Net to anyone, anywhere, anytime, on anything.?
Sun has a very strong focus on bringing the Net to the people of the world. Fluid as their objectives may seem, their focus has always been on the Net. The aforementioned managerial quotes testify to the uniformity of this focus down through the ranks of Sun. When questioned on Sun?s secret to success, hockey enthusiast Scott McNealy replied, ?The key to our success? Focus. As Wayne Gretsky used to say, ?Do not skate to the puck; skate to where it is going??. It is very important and exhilarating that a management team can concur and spread the fundamental truth of a company so large and successful to their employees. Everybody from the CEO to the intern pee-on must know what Sun stands for. And they do.
Another attribute of Sun?s management team is that they are very open-minded to the changes of the technological and social environments of the world. As they are very concerned with the latest technologies, they are also sensitive to what current and potential customers want now and in the future. But, never is the sight taken from the focus: to provide every man, woman, and child with access to the Net anywhere?. In analogy, Sun is to Focus as a fish is to food. Not that Sun should be compared to the (lack of) ingenuity of the fish, but rather the tenacity a fish possesses to spontaneously dart off in a new, more advantageous direction.
Societal Environment
When analyzing the Societal Environment, four major areas must be studied to get a view of what external forces affect the long-run activities of a business entity. These areas are:
1. Economic ~ this is mainly concerned with money and its exchanges
2. Technological ~ ideas and inventions for problem-solving
3. Political-Legal ~ involves justice and regulations on law and distribution of power
4. Socio-cultural ~ involves customs and morals, and values of a society
To keep the information pertinent, comments will only be made on factors that are directly influencing Sun at the current time.
The Economic environment has been a little uncertain in the past month, due to the chaos of the presidential election in the United States. The stock market has dropped steadily, thus affecting investor confidence in the market directly, and in Sun indirectly. Sun experiences lower investments when the market dips, thus how they are affected during the presidential election. When the president is finally selected and no legal issues are pending, then the market is assumed to rise to where it was before the election. Economists reveal that the U.S. may be in the beginning of a recession, which if not slowed and/or reversed, dips us into a depression. Sun, like any other company feels this economic phenomenon by decreased sales and investments.
Technologically, the world is evolving at a rapid rate, with the U.S., Japan, and Europe leading. Consumers are adapting to the rapid changes and, resultantly, expect more innovative products in a shorter period of time. Sun is capable of meeting these standards, as there R&D department is heavily funded. Reviewing Sun?s past products in congruence with the changes in the technological environment, one may assume that Sun is very capable of competing in the ever-morphing market of technology.
The political and legal happenings of the current times involve many threats to Sun Microsystems. For example, anti-trust regulations (Sherman Anti-trust Act), lawsuits, and elections have an effect on the economic, operational and ethical cores of the business. Currently, Sun is entangled in a lawsuit against Microsoft. Microsoft allegedly was licensed as a user of the Java platform, but Microsoft took the platform and coded it so that it was not compatible with Sun?s version of Java. Sun is suing Microsoft for $35 million. Anti-trust laws are also regulating Sun. These laws monitor Sun?s success of gaining market share and post red flags if Sun is appearing monopolistic, as was aforementioned Microsoft. Ethically, legal and political matters can affect Sun. If Sun is dealt a blow, like a lost lawsuit or an anti-trust accusation, employees may lose pride in Sun or feel threatened by the competition.
The socio-cultural environment of the world is becoming very receptive to new technologies, thus making Sun?s products appealing to the masses. Sun has experienced rapid growth in the last five years, which testifies to the acceptance of the world?s societies to Sun?s ideas and merchandise. People (users) are still wary of using the Internet to purchase products with their credit cards, which hints that they have not fully accepted technological companies? missions to simplify consumers? lives.
Industry Analysis
The Internet/software industry is a very competitive place to be at this time. Sun is up against giants such as Microsoft, IBM, Intel, and others. Relatively new to the scene, Sun has assumed a respectable position amongst these Goliaths. Despite their apparent success, certain industry precautions must be taken. It is evident that the industry environment is always changing and the following are a few examples of the current threats:
Interest Rate fluctuations: the market is currently stable as far as interest rates go, due to the United States? thriving economy (assuming we get a President soon). As interest rates stay relatively low, investors will continue to buy shares in Sun. Assuming the rates skyrocket, this is damaging to Sun, as investors invest less and/or sell their shares.
Foreign Currency Exchange Risk: as Sun handles business in other countries, the currencies of those countries and their fluctuations may have an affect on Sun?s gains and losses, but Sun estimates that as of June 2000, Sun could incur maximum potential one-day loss of fair value of only $27 million. This figure is based primarily on the Japanese yen, British pound, and the Euro.
The Euro Conversion: as of January 1, 1999, many European countries entered into a 3 1/2-year conversion of their currencies into the uniform Euro. During the ongoing conversion, Sun has embarked on several tasks including a reassessment of currency risk, negotiating and amending licensing agreements, and processing tax and accounting records. These ongoing tasks will make the transition very smooth for Sun?s overseas business, when Europe completely converts to the Euro.
Other factors that Sun may face in the environment are threats from other companies and legal factors. This was covered in the External Factor Analysis Summary (EFAS). Repeatedly, Sun has been noted for its high adaptability to factors of the outside environment, so one may assume that Sun will never be totally blind-sided by the aforementioned industry threats.
Corporate Structure
The Sun?s Headquarters are located in Palo Alto, California. Its significant operations outside the United States include manufacturing facilities, design centers, and sales offices in Europe, the Middle East, Africa, as well as Japan, and the rest of world. Its manufacturing activities take place in 2 countries while its International Research & Development activities take place in 9 countries (China, India, Japan, Ireland, France, U.K., Canada, U.S., Israel). International Sales, Service, and Support activities take place in 53 countries. International Distributors are located in more than 170 countries.
Sun designs, manufactures, markets, and services network computing systems and software solutions that feature networked desktops and servers. Various product divisions including Computer Systems and Storage, Enterprise Services and various other divisions organize the Company.
Each division has a divisional executive vice president who reports to the President of the Company. In addition to the aforementioned divisions, finance and administration, as well as other corporate groups also report to the President of the Company. Products in the Computer Systems and Storage segment include a broad range of desktop systems, servers, storage, and network switches, incorporating the UltraSPARC processors and Solaris Operating Environment.
Corporate Culture
The products and services that Sun Microsystems provides, as mentioned previously, are made to be able to work within any operating system, program, and/or Internet server or website available. Again, doing this is an integral art of Sun?s purpose and mission.
The ?humanitarian? focus with respect to Sun?s dream of providing every man, woman, and child access to the Internet anytime, anywhere, and from any machine along with the attitude that McNealy has brought to the company have created a corporate culture that boasts both efficiency and adaptability. This says a lot about an enterprise. Though the world is changing at speed never before experienced and demands change by the minute, Sun has been able to efficiently change its direction without veering from its main goal.
After McNealy took over in 1984, he started to change e the function of Sun Microsystems at he, after a few years, gave the company the strength and foresight it has need to maintain its success and growth. In 1986, after the company went public and experienced its first quarterly loss as a public enterprise, McNealy decided to reorganize Sun. He pushed profit and loss responsibility down to individual product organizations, which he called planets, which made them feel the troubles if things weren?t going perfectly well.
McNealy?s influence over the corporate culture is immense; his personal traits are magnified in the operations of the company that he oversees. The corporate culture at Sun is based on his own motto: ?Kick butt and have fun.? This motto has led Sun to become recognized widely as an aggressive marketing force as well as a place where one can be juvenile in his/her behavior. Such a culture leads to extended productivity as work becomes play and the employees feel that they form an integral part of Sun?s success.
Marketing
In 1998, Sun Microsystems developed new graphics capabilities along with the fastest workstation available. This allowed them to capture and steal market share from their competitors at the markets’ high-end. They took on a more aggressive marketing tactic to deal with the markets’ low-end. It was a trade-in program designed to ensure investment protection for their current customers while appealing to their potential customers. They called it “Jurassic-Back,” “Mac-Back,” and “Paq-Back” specifically to target Silicon Graphics’, Apple Computer’s, and Compaq’s users. It was a means to encourage the use of the Sun platform instead of the other personal computers and workstations.
In November of 1998, there was a union between America Online, Netscape Communications, and Sun Microsystems. This allowed Sun to broaden its product line to include Netscape’s corporate and electronic-commerce software with their hardware. Netscape’s software had already established a solid reputation for itself. Sun also became the supplier of hardware for American Online, which had proven itself to be the largest online service. Thus, this alliance further assisted Sun in marketing itself as an even more respected company. It now had a larger customer base and could gain a greater distribution of its software technology. This union proved to be the greatest marketing decision in and of itself.
Finance
1. Liquidity Ratios
Current Ratio = 1.4
This is a short-term indicator that Sun has sufficient current assets to cover its current liabilities.
Quick Ratio = 1.33
This is the indicator that Sun has sufficient current assets to cover its current liabilities without including inventories.
Inventory to net working capital = .26
This is the indicator that Sun still has a bit of cushion even if they are threatened by unfavorable changes in inventory.
Cash Ratio = .39
This shows that Sun can cover its current liabilities with its cash and/or cash equivalent.
It is quite evident that Sun Microsystems has done a great job of being able to cover their current obligations with its highly liquid assets.
2. Profitability Ratios
Net Profit Margin = 11.8%
This shows that 11.8% of the after-tax profits are generated from $1 of sales.
Gross Profit Margin = 52%
This shows that 52% of the net sales are available to cover other expenses even after cost of goods sold has been satisfied.
Return on Investment (ROI) = 16%
This shows that 16% of the net profits after taxes are generated because of the total assets utilized in the company.
Return on Equity (ROE) = 31%
This shows that 31% of the net profits after taxes are generated because of the book value of shareholders? total investment in the company.
Earnings per share (EPS) = $1.18
This shows that $1.18 of the after-tax earnings are generated for each share of common stock.
Sun has been rather profitable due to their invested assets and shareholders? equity. Meanwhile they are generating enough revenue to post a profit.
3. Activity Ratios
Inventory Turnover = 17.5
This means that about 17.5 times the average inventory of finished goods were sold within one year. This is up from 17.3 of 1999 which means Sun is moving inventory quicker.
Days of Inventory = 27 days
This means that Sun has approximately 27 days worth of inventory on hand at any given time.
Asset Turnover = 1.11
This means that Sun generates 1.11 worth of sales by each dollar of fixed assets.
Average Collection Period = 48 days
This means it takes approximately 48 days for Sun to collect on its receivables that are made on credit. This is down from 59 days in 1999 which means Sun is collecting receivables quicker.
Days of Cash = 43 days
Sun has tried to maximize its utilization of assets as well as minimize its collection period in an effort to cover its payable period.
4. Leverage Ratios
Debt to Asset Ratio = 0%
This means that there have been no borrowed funds to finance Sun?s assets.
Debt to Equity Ratio = 0%
This means that there has been no funds provided by creditors versus the funds provided by the owners.
Long-term Debt to capital structure = 29%
This means that the owners fund 29% of Sun?s long-term debt.
Current Liabilities to equity = 65.1%
This means that 65.1% of the owners? equity are current liabilities.
5. Other Ratios
Sun has never declared cash dividends and presently intends to continue this policy. Sun?s principal credit agreements limit the payment of cash dividends without the consent of its lenders. (As per 2000 Annual Report) Therefore, these other ratios cannot be defined.
Additionally, the cash provided by operating activity went up 50% from $2,511,000 in 1999 to $3,754,000 in 2000. Although the cash used by investing activities soared upward, this was offset by the cash financing activities provided. Thus, cash on hand at year-end went up 60% to $1,849,000. This all proves that Sun is not only profitable, but also has the ability to maintain itself with its operating activities.
Research, Development, and Logistics
Even though Sun Microsystems vision and strategy has remained consistent through the years, Sun realizes that the market opportunities for their products and technologies have expanded as more and more businesses take advantage of the Internet. ? All of our Research and Development, all of our intellectual property investments, are dedicated to bringing the power of the Internet to anyone anywhere, anytime, on anything.??Greg Papadopoulos Senior Vice President and Chief Executive Officer. Sun Microsystems? business is increasingly being driven by customer efforts to use e-commerce, middleware, and network storage and enterprise services to help them build, monitor, and manage their network computing environments. Sun Microsystems component technologies, JAVA, JINI, and ULTRASPARC are increasingly being implemented in consumer and telecommunications environments. JAVA is Sun Microsystems? cross-platform technology for building network-aware applications. For technology that enables devices and services to form spontaneous networks, customers can look to Sun Microsystems JINI to get connected and share information. Speed is the key to a business success.
With ULTRASPARC customers of Sun Microsystems can have powerful microprocessors that drive the Internet and enterprise networks. The proper vision and the proper focus can only take a company so far. You have to provide the goods and services needed for your vision to transform itself into reality. It?s a matter of implementing efficient processes. Taking time and cost out of the system and getting the right products to market at the right time. This also means putting together the best possible solutions for our customers through innovative programs and strategies partnerships.
To sustain its leadership in service logistics, Sun Microsystems sought to leverage information technology to streamline the parts replenishment process. New internet-based applications had the potential to all but eliminate the strategic role of distribution centers in the network, putting the focus on moving information, not parts. Sun worked with USCO Logistics to implement a new Sun business model that leveraged information systems and the Internet to link supply chain partners. With Sun?s direction and support, USCO created a web interface, which transmits a variety of order, delivery and inventory transactions from remote stocking locations and repair vendors to a database at USCO headquarters in Connecticut. The solution enabled the creation of a Virtual Logistics Network in which more than 50 “best in-class” partners ? manufacturers, repair vendors, delivery companies and logistics service providers ? collaborate to deliver ONE seamless solution for Sun?s customers.
As a result of the new model, Sun will achieve:
? Enhanced customer service
? Reduced inventory
? Reduced cycle time
? Increased supply chain efficiency
According to Sun?s Peter Pazmany, Senior Director of Business Development and Operations, Enterprise Services, the Virtual Logistics Network for service parts management shifts the focus from moving parts to moving information, using the internet as a key enabler. “Our solution enables Sun to increase parts availability and customer satisfaction, while aggressively managing inventory levels and profitability,” says Pazmany. “It provides Sun customers and shareholders a truly world-class service
solution.”
Human Resources
Sun employees are the most important resource and the basis for Sun’s success. Sun strives for an environment characterized by respect for each individual, where cultural and ethnic diversity are blended by teamwork into a harmonious work force. Every year, the President and CEO, Scott McNealy, reaffirms Sun’s commitment to diversity. Sun has been recognized numerous times for its strides and achievements in diversity.
Employee Benefit Plan
The Company’s 1990 Incentive Plan and other employee stock option plans provide the Board of Directors broad discretion in creating employee equity incentives and authorize it to grant incentive and non-statutory stock options, as well as certain other awards. In addition, these plans provide for issuance of non-statutory stock options to eligible employees to purchase common stock, at or below fair market value, at the date of grant, subject to certain limitations set forth in the 1990 Incentive Plan.
Employee Stock Purchase Plan
To provide employees with an opportunity to purchase Sun common stock through payroll deductions Sun established the 1990 Employee Stock Purchase Plan. Under this plan, Sun’s employees, subject to certain restrictions, may purchase shares of common stock at 85% of the fair market value at either the date of enrollment or the date of purchase, whichever is less.
Employee 401(K) Plan
The Company has a 401(k) plan known as the Sun Microsystems, Inc. Tax Deferred Retirement Savings Plan (the “Plan”). The Plan is available to all regular employees on the Company’s U.S. payroll and provides employees with tax deferred salary deductions and alternative investment options. Employees may contribute up to 16% of their salary, subject to certain limitations.
Information Systems
As an established leader in High Performance Computing (HPC) and network technology, Sun Microsystems, Inc. is helping HPC customers capitalize on the Net Effect – the trend driving the exponential growth and increasing opportunities of the Internet as users, devices, services, data and demand for high availability continue to multiply. At the Supercomputing 2000 show in Dallas, TX, Sun is equipping customers, new and old, to utilize the power of Web-centric computing and provide massively scalable systems that span the network. At SC2000, Sun will be demonstrating the products, services, and technologies that comprise a virtual supercomputing farm, allowing customers to harness unused resources (CPUs, memory, and storage) across the network to handle the most data-intensive applications.
“It’s clear that the future of supercomputing is network-centric, and lies in both the shared power of smaller, parallel web-serving systems and large, cooperating clusters of SMP servers,” said Steve Campbell, Director of Marketing, Enterprise Systems. “Rather than focusing solely on traditional islands of computing power in a single location, Sun is applying the principles of Net Effect to bring disparate commercial and scientific communities the hardware they need to share data and resources across the globe.”
In the last year, Sun has established itself as the second-leading HPC provider, growing its market share by 20 times since it entered the supercomputing market in 1996 (according to IDC’s mid-year report on the High Performance Technical Computing market, published August 30). In the “World’s Top 500 Supercomputers” list announced on Friday, November 3, Sun captured the second-highest number of systems with 92 entries, representing more than 18 percent of the total list. Recent announcements illustrate Sun’s continued commitment to the HPC market, and its expanded efforts to tackle new generations of commercial applications such as decision support, data mining and bio-informatics.