Sun shines on silver anniversary

Oct. 18, 2000, might go unnoticed in the long history of Sun Microsystems, but it marked a critical moment in the history of a company that celebrates its 25th anniversary this week.

On that day, an upbeat Scott McNealy spoke with analysts and unveiled his company's eye-popping first quarter earnings (US$510 million on revenue of $5 billion -- an 88 percent increase over the same quarter in 1999). Looking forward, McNealy saw nothing but roses in Sun's future. Systems using the company's new UltraSPARC III processor had gone on sale in the preceding quarter, and McNealy predicted they'd be big hits in Sun's enterprise customer base, "offering unprecedented levels of uptime, reliability and quality."'

It wasn't to be. Even as he talked up Sun's future that day, the company he helped found 18 years earlier was slipping, unnoticed, into a challenging new era that would shake it to its core, shake him from his perch as CEO, and challenge the very assumptions and strategies that had turned Sun into a Silicon Valley legend and Wall Street darling.

Over the next 12 months, as the air spilled out of a dotcom bubble that had fueled so much of Sun's growth, the company's stock would lose 80 percent of its value. Exactly one year later, McNealy would face the same analysts to announce first quarter revenues that were 43 percent lower than in 2000 and a net loss of $158 million.'

And the news from Sun wouldn't improve for a long, long time as the company struggled in the years that followed to find a recipe for success while sticking doggedly to homegrown technologies like SPARC and its Solaris operating system. During one dark stretch, the company recorded 10 consecutive quarterly losses -- a blow that would fell many, lesser firms.

Instead, Sun said last week that it is on track for a second consecutive profitable quarter after the company posted net income of $126 million on revenues of $3.566 billion for the quarter ending Dec. 31, 2006, ending a streak of five consecutive money-losing quarters.