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Sun Micro's Asia brightens amid U.S. gloom
January 28, 2008 / 9:19 AM / 10 years ago

Sun Micro's Asia brightens amid U.S. gloom

HONG KONG (Reuters) - Sun Microsystems Inc JAVA.O, the world’s No.4 maker of computer servers, expects revenue across most of Asia to grow more than 15 percent in 2008’s fiscal second half as business demand stays resilient despite fears of a potential economic slowdown.

That forecast -- for greater China, India, Korea and ASEAN countries -- outpaces Sun Micro’s prediction of at least 5 percent for the overall company from January to June, Lionel Lim, Chief Operating Officer of Asia Pacific, told Reuters on Monday.

Sun draws 17 percent of its $3.62 billion global revenue from the Asia-Pacific -- which includes Japan, Korea, greater China, India, South Asia, Australia and New Zealand -- in the fiscal second quarter ended December 30, and cites emerging markets as its biggest driver of growth.

ASEAN is a grouping of much of Southeast Asia, including Thailand and Singapore.

“Our investment in these four regions is powering the Asia Pacific,” Lim said in an interview.

“The robust demand in the region is driven by a build-up of the economy, increasing Internet users, and high oil prices -- which lets more companies turn to technology.”

Chief Executive Jonathan Schwartz has said the company had not felt the effects of a much-debated U.S. economic slowdown, arguing that corporations turn to technology to enhance productivity during a recession.

So it’s forging ahead with plans to add 300 employees in greater China, India, Korea and ASEAN by the end of March, despite mounting worries that a slowing U.S. economy could wallop an export-dependent Asia.

“We will continue to invest. We are bullish about the perspective we have,” Lim said, adding that the company now maintains about 3,000 workers in the Asia Pacific.

“We expect to have an aggregate revenue growth rate of over 15 percent in these four areas in our fiscal second half which ends in June.”


California-based Sun, which vies with IBM (IBM.N), Dell DELL.O and Hewlett-Packard Co (HPQ.N) to sell servers to businesses but had sustained steady losses before last fiscal year, has been trying to make a comeback.

It slashed more than 4,000 jobs last year, began selling server computers with processors from Advanced Micro Devices Inc AMD.N and Intel Corp (INTC.O) in addition to its own chips, and growing a software business.

Sun Micro’s revenue from India grew 25 percent in the fiscal second quarter while greater China and Korea grew 15 percent apiece, Lim said.

Lim, who is also president of greater China, expected turnover from the area, which encompasses mainland China, Hong Kong and Taiwan, to continue to outpace 11-12 percent market growth in 2008.

Sun ranked No.1 in unit shipments in Unix server market in Asia Pacific excluding Japan in the first three quarters of 2007, according to research firm IDC.

Lim shrugged off competition with HP in the region, but regarded IBM a strong rival.

“Sun will continue to grow faster than the market for greater China. Thus, we are gaining market share,” he said.

“We don’t see HP as much anymore,” he said. “IBM is a strong competitor, however, we differentiate it with open-source. IBM is strong in services and do a lot of outsourcing ... we just compete in that battleground.”

Open source software is intended to be copied and modified freely by users, leaving developers to make money from selling features and technical support, unlike paid-for proprietary software such as Microsoft’s (MSFT.O) Windows operating system.

Sun said this month it would buy Swedish database-software maker MySQL AB for about $1 billion.

Sun Micro has tried hard to market its small but fast-growing software business, which includes the Solaris operating system and Java programming language. If Sun succeeds with MySQL, whose database software is used by the likes of YouTube and Facebook, it could mean increased bundled sales of support for MySQL but also more hardware sales.

“It is really a big deal for Asia because the amount of MySQL user-downloads in this region is very high,” Lim said, adding that MySQL has 50,000 downloads a day, worldwide.

Editing by Edwin Chan

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