layout hack
layout hackMain Pagelayout hack
layout hack
RSS Feed RSS Feed Main page
layout hack
layout hack
layout hackAbout Melayout hack
layout hack
Software I wrote
Friends of mine
Stuff I have for sale
layout hack
layout hack
layout hackPersonal Newslayout hack
layout hack
March, April.
January, March, August.
Jan, Feb, Apr, May, July, August, September, October.
Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, Oct, Nov, Dec.
Jan, Feb, Mar, Apr, Jun, Jul, Aug, Sep, Oct, Nov, Dec.
Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, Oct, Nov, Dec.
Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, Oct, Nov, Dec.
Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, Oct, Nov, Dec.
Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, Oct, Nov, Dec.
Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, Oct, Nov, Dec.
Jan, Feb, Apr, May, Jun, Jul, Aug, Oct, Nov, Dec.
Jan, Feb, Jun, Oct, Dec.
Jul, Aug, Sep, Nov.
layout hack
layout hack
layout hackGeek Stuff (computer related)layout hack
layout hack
Digital Music
Why LiveWire Sucks
Why ASP Sucks (a bit)
layout hack
layout hack
layout hack(some of) My Interestslayout hack
layout hack
Sony Playstation
layout hack
layout hack
layout hackSearchlayout hack
layout hack

layout hack
layout hackAdslayout hack
layout hack

Valid HTML 4.01!

May 1, 2008

Once upon a time I was young and naive about retirement investing and fell victim to churning by a broker, who more or less chewed up everything I had saved in my early 20s. Since then I've paid much closer attention and read a lot about retirement investing (most notably, A Random Walk Down Wall Street), so most of my retirement money is in an index mutual fund (FFNOX to be specific) that I leave alone.

But for fun, a teeny part of that nest egg is invested in regular stocks that I do fiddle with occasionally.

I bought AAPL at 112 back in May '07 in anticipation of iPhone hysteria, and that turned out well (>50% gain in under a year). That gain offset my small loss on PALM, which I bought with the leftover funds that were to small to buy a share of AAPL (i.e. less than $112). Palm has proven that they can make nice phones again (the Foleo flop made everybody wonder if they were lost in the woods entirely), but they still seem to have management problems related to finances. This has kept the stock from popping, despite their recent return to relevance in the US smartphone world. I still think PALM would be a good long term investment, particularly due to the recent addition of Jon Rubinstein and Fred Anderson (who were largely responsible for the iPod and Apple's financial survival during their turnaround, respectively). Those guys may not have done it all themselves but at least they know what the revival of a consumer electronics product line and balance sheet look like, so there's at least somebody at PALM now with the knowledge required to get them back on track. On the other hand, I think AAPL is overvalued now; I don't know of anything big in their pipeline that would justify speculation. I think their current price is based on vague expectations of continued successful execution on their current product line. So I'm out of AAPL for now.

Despite my optimism about Palm making a comeback or being acquired, I like Sun Microsystems (JAVA) better. They've taken a major beating ever since the dot-com crash, when they had been the go-to vendor for big expensive server hardware. All that hardware was bought on expectations of capacity needs that never came for their customers, and then it was auctioned at rock bottom prices in 2001, which meant a double-whammy to Sun's hardware sales: fewer customers, and a glut of their own product on the market at cheap prices, snapped up by their remaining customers. Meanwhile, the absence of VC money forced startups to economize on hardware, just as x86 hardware was completing its conquest of the low end of the server market. Linux has failed to dethrone Windows on the desktop, but Linux on x86 hardware is overwhelmingly the choice for small and medium servers now, and Sun's big iron servers, SPARC processors, and proprietary Solaris OS are cornered in the high end of the market. So their stock has suffered tremendously. From a high share price of 245.50, they currently sit at 16.33.

Meanwhile, they have executed a partial transformation into a vendor that sells what today's customers want to buy. They sell hardware on the low end that looks pretty much like the PC servers that ate their lunch in the early part of this decade. They're no longer joined at the hip with Oracle; far from it: they bought open source database vendor MySQL AB back in February. They've hired members of the other major open source database product (PostgreSQL), are shipping Opteron and Xeon based servers running Linux, Solaris, or Windows(!), sell storage arrays, and even make a really nice IDE called NetBeans, that supports Java and Ruby on Rails (among other things). They've also hired two of the developers working on JRuby, which is currently the best hope for making Ruby programs run efficiently (currently the achilles heel of the Ruby on Rails platform). So the whole heap of technologies that I'm using is either supported by Sun if you buy a support contract from them, or is directly funded by Sun, or is sold by Sun at competitive prices.

Interestingly their stock just took a dive today because they broke their five-quarter profitability streak. The reason? According to this article on Bloomberg, referring to remarks by Sun's CFO Michael Lehman, "Most of the decline stemmed from Sun's high-end storage and server products, he said." But the overwhelming trend in servers this decade is the replacement of small numbers of big servers by large numbers of small servers (which are now comparable to midrange servers of just a few years ago). So high end customers are now buying "low end" products. Regardless of budget fluctuations of big IT customers, the market for big expensive server hardware is shrinking, being replaced by a growing market for small, inexpensive, less reliable but still easy to manage server hardware.

That tells me that Sun's transformation is headed in the right direction: open up the proprietary software as much as possible, including Java itself, and sell customers the hardware they already want, instead of the hardware that you have to tell them they ought to want instead. And sell them services, by hiring the core people who actually write this open source stuff, and getting those people to spend some of their time training your services folks. People like me, who work at cheapskate startups, are not Sun's audience, so this doesn't really appeal to me. But big companies and banks are more receptive to the idea of a vendor who makes software and hardware and sells services that all work together, but who can also mix and match. Sounds like IBM's reinvention as a services company, in fact. So I think in the next year or two, as GPL'd Java becomes accepted by the open source community, and as JRuby becomes a more standard Ruby on Rails environment, and as banks recover from the current recession, Sun should do very well selling premium "low end" gear with premium services to high end customers.

So, I'm now a shareholder of Sun, and we'll see if they can reinvent themselves as a company that will sell you what you want when you want it, as opposed to 3-5 years after you wanted it.