Good, but not leading, server market position; Strong, consistent product development skills, supported by significant research and development expenditures; Geographic revenue diversity (more than half of revenues come from international markets); and Use of partnerships to minimize fixed-asset investments and maintain a relatively low-capital-intensity operating model. Highly competitive industry; Server segments in which Sun historically has not had a strong position (such as Windows and Linux) are experiencing higher growth rates; Lack of consistent revenue growth; and Weak and inconsistent profitability. The rating on Santa Clara, Calif.-based Sun Microsystems Inc. reflects the company's good, but not leading, position (based on all operating systems) in the highly competitive global server market, relatively narrow market base--particularly in comparison with major competitors--and inconsistent
