Sun Microsystems (SUNW - Cramer's Take - Stockpickr - Rating)
is breaking out its silicon group into a separate business division, as
the company moves to step up sales of its computer chips beyond its own
products.
The Santa Clara, Calif., company said Tuesday that it has
established a microelectronics group headed by Sun veteran David Yen.
The group will focus on developing chips that target the
high-performance computing, networking and cryptography markets.
Tuesday's organizational change is the latest move by CEO
Jonathan Schwartz to rejuvenate the tech company, which has struggled
since the dot-com bust several years ago. The company's stock is up 21%
since Schwartz took the helm from co-founder Scott McNealy in April 2006.
In January, Sun posted a modest profit, after a string of quarterly losses. And private equity firm Kohlberg Kravis Roberts invested $700 million in the company.
Sun's Sparc microprocessors are available in servers from Fujitsu. Other than that, Sun's chips are used exclusively in Sun's own line of servers and workstations.
"We're really seeing a market for Sun innovation outside of Sun,
and that other people want to leverage what we've done," said
spokeswoman Kathy Tom Engle. One example is Sun's Solaris operating
system, which now runs on hardware from various computer makers such as
Dell (DELL - Cramer's Take - Stockpickr - Rating) and Hewlett-Packard (HPQ - Cramer's Take - Stockpickr - Rating).
Tom Engle said the move to sell chips to other computer makers
was driven by the success of the new line of UltraSparc T1 processors,
formerly code-named Niagara, which have achieved more than $100 million
in sales in each of the past three quarters.
Sun is also working on a new 16-core processor, dubbed Rock, which is expected to ship in 2008.
Tom Engle said the company was not ready to announce any deals with
companies that planned to incorporate Sun's chips inside their products
at this point. But she said that separating the chip group as its own
business unit will allow Sun to better focus on outside business
opportunities.
"These engineers are living and working inside Sun today and
have been considering their primary customers to be Sun. Now they get
to branch out beyond there," Tom Engle said.
Yen has been with Sun for nearly 20 years and was involved in the release of the Niagara chip.
Yen's job heading up Sun's storage business will go to Senior
Vice President Jon Benson. As part of the transition, Sun's networked
attached storage and storage appliance businesses will report to John
Fowler, who manages Sun's Systems business.
Shares of Sun, which finished Tuesday's regular trading session down 2.6% at $6.06, were down a penny in extended trading.
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