Wall St. Frets Over Sun (JAVA)

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Sun Microsystems (NASDAQ: JAVA) titillates investors every year or so with some series of announcements. It is building up its operations in China. It has a new open source software initiative. It will offer vitualization products on its servers. Whatever the next big thing is, Sun has a piece of it.

But, the piece never amounts to much because Sun cannot generate any revenue growth. The sales increases it has had over the last couple of years were due to M&A. The operating income improvements came largely from firing people.

Over the last six months, the market has lost confidence in Sun again. It shares are down 35% over that period. By contrast, Hewlett-Packard (NYSE: HPQ) is off 12% and IBM (NYSE: IBM) is flat.

Sun now gets a chance to prove Wall St. wrong. Expectations for the quarter the company is about to report are embarrassingly modest. Revenue is expected to grow less than 4% to $3.4 billion according to First Call. It is a number that most companies could make with a hand tied behind their backs

Sun is not most companies.

Douglas A. McIntyre.