Sun May Surprise Its Critics

“Much of the coverage has focused on Sun’s $1.7 billion
quarterly “loss” and plans to cut 15 percent to 18 percent of its
workforce as evidence that the company is in peril. One Associated
Press story, for example, said the economic downturn was pushing
Sun “to the brink of extinction.”

“The truth is that Sun has much more time than the urgent tone
of much of the coverage would have you believe, and has no need for
a white knight or a federal bailout. The company’s dramatic
September-quarter loss was largely a non-cash write-down — the
company’s actual cash levels dropped $242 million in the quarter.
Not pretty, but with about $2 billion more in cash and liquid
investments than debt, the company could survive for a couple of
years at its current cash burn rate. There are blue chip companies
that would kill to be in that position right now.

“But with its recently announced layoffs, the company will do
much better than that. In fact, the layoffs seem calculated to get
the company back to break-even, ensuring frustration for years to
come for those looking for a Sun end game.”

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