Part of the DaveNet Mail website. San Francisco CA USA. 11/5/96.

Let's Have Fun -- Now! RE: TO BE OR NOT TO BE

Sent:11/5/96; 2:13:51 PM
From: gnu@toad.com (John Gilmore)

>   Some companies book revenue this quarter and hope that they can make
>   it up next quarter. We've seen this kind of management collapse many
>   times in the past. Remember Ashton-Tate? I think even Oracle got
>   caught with its hand in this cookie jar. Sun had a financial meltdown
>   in the late eighties.

The implication seems to be that Sun's meltdown was from booking revenue that it didn't have? Nope. I was out of the company then, but watching pretty closely since most of my net worth is still (even now) in Sun stock. What happened was that two unrelated things happened at the same time:

* Sun converted their order-tracking system to a new system, and the conversion didn't go smoothly. (I forget whether they were moving from HP3000's running MANMAN to an IBM mainframe; or from the mainframe to an Oracle-based package running on Suns.)

* Sun announced a new product line (SPARCstation-1) that completely rendered the old lines (Sun-4's and the last gasp of Sun-3's) obsolete.

Both were huge projects inside the company, both juggernauts. Nobody thought about what would happen if they hit their peak simultaneously. One was in the product development/marketing/support arm, the other was in the back-office/accounting/manufacturing arm. Oops!

All the customers immediately canceled their orders for the old machines, and tried to enter orders for the new machines -- but the order entry system wasn't working!

It took them a quarter to straighten it out and by then they'd slid large amounts of sales into the next quarter, causing their first-ever quarterly loss. But it wasn't for lack of a product, nor was it for lack of willing customers, nor because of accounting trickery. It was a straight breakdown of the order entry system at a sea-change in models.

John

Let's Have Fun -- Now!

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