Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Will a New Coat of Paint Make Sun Shine?

Having been in the PR business for more than a decade, I can appreciate a new marketing campaign as much as the next guy. So when today revealed that one of my many former employers, Sun Microsystems (Nasdaq: SUNW  ) , is about to unveil a new $50 million branding initiative, I took notice.

The ideas look solid at first blush. Sun intends to convince potential buyers -- and, undoubtedly, investors -- that its servers and software provide essential links between businesses. By enabling networked computing (the thinking must go), Sun revs the engines of commerce. It's not an unfounded theory, since networks are involved in everything from playing video games to paying bills. also reports that Sun's new image will feature a slim S-curve to signify the global "sharing" of information. It also touches on the open-source revolution happening around the world, with which Sun has become fully engaged. Again, both make sense.

Yet there is also one really huge, ugly problem in all this: Sun is hardly the only company that moves data around networks or supports open-source software. Indeed, researcher IDC just reported that IBM (NYSE: IBM  ) and Hewlett-Packard (NYSE: HPQ  ) are in a statistical dead heat for server market-share leadership. IBM came in at 28.3% while HP notched 27.6% of global server revenue during 2005's first quarter. Where did Sun end? Down again, to 9.9%.

Investors so far appear unenthusiastic about Sun's makeover; the shares are trading lower by about one-half of a percent as I write. I can understand why. So many rebranding campaigns offer little more than a new coat of paint and some flashy new marketing materials. But not all of them; some combine marketing moves with structural business improvements. Sun may be in that camp.

During the fiscal third quarter, Sun trimmed its net loss by nearly $200 million after excluding special items, while gross margin also improved by a percentage point. If the rebranding takes hold, that momentum should accelerate. If not, well, look for a new coat of paint a year or two from now.

For other techie Foolishness:

Love stocks but don't like the work? Let us help. Take a risk-free trial to any of our investing newsletters today. Your portfolio will thank you.

Fool contributor TimBeyers is having his baby boy's room painted today. What's your take on Sun's rebranding? Will it make a difference? Share your thoughts with other Fools at the Sun Microsystems discussion board. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Fool profile, which is here. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 492423, ~/Articles/ArticleHandler.aspx, 10/27/2016 11:39:16 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,206.52 7.19 0.04%
S&P 500 2,137.13 -2.30 -0.11%
NASD 5,239.69 -10.57 -0.20%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/27/2016 11:23 AM
HPQ $14.04 Up +0.13 +0.90%
HP CAPS Rating: ***
IBM $153.46 Up +1.65 +1.09%
IBM CAPS Rating: ****
MSFT $60.58 Down -0.05 -0.08%
Microsoft CAPS Rating: ****