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+DJ Sun Micro Dn 6%;Merrill Note Cites Server Market Concerns
02/01/2002
Dow Jones News Services
(Copyright © 2002 Dow Jones & Company, Inc.)
(MORE) DOW JONES NEWS 02-01-02
01:49 PM
=DJ Sun Down -2: Analyst Says Intel Competition Hurting Sun
By Pat Maio
Of DOW JONES NEWSWIRES
LOS ANGELES (Dow Jones)--Sun Microsystems Inc. (SUNW) fell 6% Friday on comments made by a Merrill Lynch analyst who sees Sun's Unix server market threatened by a rival system offered by Intel Corp. (INTC)
Merrill Lynch analyst Steven Milunovich said recent comments made by Oracle Inc.'s (ORCL) Chairman and Chief Executive Lawrence Ellison "have given us cause for concern" about Sun's high-margin Unix server market.
Oracle is replacing three Unix servers that run the bulk of its applications with a cluster of Intel servers running the Linux operating system, wrote Milunovich in a research note.
"He said it would take several years, but big machines would inevitably die," recounted Milunovich.
Essentially, Ellison underscored a Merrill Lynch concern that that Sun's Unix business will be "attacked from below by Intel servers" running Microsoft Corp.'s (MSFT) Windows NT operating system or Linux.
There is particular concern with Linux given that it is easier to learn than the Solaris system, explained Milunovich in the note.
"In our view, Linux is a greater threat to Sun than Microsoft because Solaris programmers can more easily learn Linux," he said. Linux is freely distributed and developed by programmers scattered around the world.
Milunovich said Sun must address these concerns at its meeting with analysts next week.
Frank Smith, a Sun spokesman with the Palo Alto-based computer workstation maker, could not immediately comment on concerns raised by Milunovich in his research note. Shares of Sun Microsystems recently traded at $10.09, down 66 cents, or 6.13%, on volume of 46.8 million, compared with daily average volume of 52.3 million.
-By Pat Maio, Dow Jones Newswires; 323-658-3776;
patrick.maio@dowjones.com
(END) DOW JONES NEWS 02-01-02
02:05 PM