McNealy: Sun's Still ViableMcNealy: Sun's Still Viable

Responding to concerns that his company may not have a long future if its financial fortunes continue to sag, Sun Microsystems CEO Scott McNealy on Tuesday looked to assure IT buyers that Sun will be around for the long haul.

"We're as viable as any company out in the marketplace," said McNealy, who pointed to Sun's strong cash position and growing market share in some key IT sectors as evidence of the company's health.

With many of its customers now on the downside of the dot-com and telecom boom and bust, Sun has suffered greater exposure to the technology downturn than its competitors. For fiscal 2002, it posted a net loss of $255 million. The company's stock now trades in the $2 to $3 range--down 80% from highs fueled by the Internet bubble. As a result of its sagging share price, Sun said last week that it may take a charge of up to $2.2 billion in the current fiscal year to cover revaluation of some acquisitions and investments.

Still, McNealy, speaking at a Gartner conference in Orlando, Fla., said concerns that Sun could go out of business are misplaced. Sporting a fresh crew cut that he likened to current IT budgets--"it's short," he said--McNealy noted that Sun has between $5 billion and $6 billion in cash and has almost no debt. The company has generated cash for the past 12 quarters, he added, quipping, "Earnings are an opinion, cash is king."

McNealy also said Sun isn't a likely takeover target, despite its cheap stock price. Any competitor big enough to swallow Sun whole would likely face antitrust issues if it attempted to buy the company, he said. "And they would have to pay cash, because I don't want anybody's stock."

McNealy said Sun is gaining market share in 64-bit computing against Hewlett-Packard and IBM and that the company is poised for growth in traditional sectors like government and education. He joked, "We're the 'O' in old economy."