Truly Fair Disclosure


We’ve got our fourth quarter (Q4) and full 2007 fiscal year earnings announcement coming up on Monday, July 30th.


I wanted to alert everyone to a change we’ll be making this quarter – related to how we publish those results, and going forward, other timely information about our financial performance. It’s a small, but exceptionally symbolic change.


I’ve asked our investor relations (known as “IR”) and press relations (“PR”) teams to gear up to announce our results via Sun’s web site and RSS feeds. We will announce our results to the general public via Sun’s IR web site before making that same information available through the third party news services that traditionally distribute such information to paying subscribers. We will simultaneously file a Form 8-K with the United States Securities and Exchange Commission (for their redistribution).


Specifically, we will publish our results to this web site on July 30th at 1:00 PM (Pacific Time), which will in turn be disseminated via open syndication protocols (namely, RSS) to those who have subscribed to Sun’s news feeds.
10 minutes after publication to the internet, we will distribute this information via traditional news wires for dissemination to private news agencies and distribution vehicles.


Referencing a dialog we’ve established with the United States Securities and Exchange Commission, and its Chairman Cox, this will place, for the first time, the general investing public – those with a web browser or a cell phone – on the same footing as those with access to private subscription services. In effect, driving an open dialog directly with investors, rather than routing information through proprietary sources. Open is as open does.


I believe this change will increase the transparency of our business, fulfill our desire to disseminate information on a fair and equitable basis, and allow the network to be used for what it’s intended – connecting people and information.


Again, if you’re interested in the data as it’s released, please check here on July 30th, 1:00 PM (PT) , and to get the latest updates directly from Sun, be sure to subscribe to our RSS feeds.


It may not seem like it, but this is a sea change in how Sun communicates with the world – and sets a path for other public companies seeking to drive greater transparency. I wonder how far off we are from ceasing to issue traditional press releases altogether… after all, no news agency could possibly suggest they reach a greater portion of the planet than the internet.

31 Comments

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31 responses to “Truly Fair Disclosure

  1. Craig Morgan

    Great initiative …
    Given Tim Bray’s stewardship of the Atom protocol and his recent announcement (http://www.tbray.org/ongoing/When/200x/2007/07/24/Atom-is-Finished), it would be nice to see the same info available via Atom …😉
    Craig

  2. Lex

    This is exactly the direction we need to keep businesses heading in. Remove the barriers to an audience being able to choose how to get their information, provide it free and unfettered.
    I wonder how the legions of PR people will react to their middleman status being eroded?
    Set up an agency to redirect people to corporate RSS feeds, or simply say that they ‘add value’.

  3. Logan

    I am not sure “PR people as the middleman” is the target here. If anything, this makes PR people _more_ the arbiters, not less.
    If Sun’s idea is to increase transparency, why the ten minute delay in providing the information to “traditional” news channels? Why not provide it simultaneously to the RSS feed?
    The telling line in Jonathan’s blog is “Again, if you are interested in the data as it’s released, please check here…” That seems to put the onus of disclosure on the recipient rather than the company. Isn’t that Reg FD backwards?

  4. Jonathan

    This week the sun.com Webservers were unavailable due to a PGE power outage in San Francisco. Let’s hope this does not happen again on the 30th of July!🙂

  5. Lou

    Bravo! For those new to RSS and Web syndication, we produced a fun yet informative video using Sun employees as the cast. Check out RSS Unleashed.

  6. I know this goes off topic a bit, but to Jonathan’s comment about the power outage yesterday, I remember thinking to myself, “wow, we have all this wonderful technology, but all it takes is one event to domino everything.” Then I thought about Katrina. How truly prepared are we all for the system to go completely down, not for just minutes, but potentially for days? Most of the work I perform relies on the network — the most advanced systems in the world can’t compensate for loss of electricity, and the interrelated services necessary to keep the network up (Utilities, ISPs, Cables, et al.). In a real emergency I guess checking for earnings postings is somewhat trivial, but it makes you think about how fragile the network is as it becomes so ubiquitous.

  7. Kenny

    Too bad Sun can’t keep web servers up and running. I have been trying to get information on a security notice from Sunsolve for several minutes now, first the site was down completely, then the link the the notice just resulted in an error… Still trying. Of course I’m sure they will keep the investor site up – don’t want to look bad from them, while those of us having to deal the constant stream of Java security issues requiring updating every few weeks can’t get to the information we need.

  8. I don’t think that postings on websites in combination with RSS feeds will take away the need for knowledgeable PR people that DO indeed add value. Posting news on your website is only great for people that actually want to take the effort to go there and collect their information instead of getting it delivered to them. RSS feeds won’t do that trick either. For one thing, you can easily get swamped again in RSS feeds and tweaking them in such a way that I can have certain press releases by Sun but not others, is still rather difficult. A good PR agency knows what to send to whom. It’s a service, it’s convenient. More convenient than having to pick it up. Also, on a more commercial note, for companies like Sun, it might be nice that your press releases end up on desks of people who can’t be bothered to register for RSS or to visit all different websites, but still like it when they get it in their mail. You will actually reach more people. So why not AND post it on your site, AND release it through mail?

  9. Dominic

    Ward, Thanks for the laugh. Earnings releases by mail… Seriously? Pigeons would be good, too. Far less energy intensive. Peanut butter works wonders with pigeons, apparently.

  10. green investor

    Love the photo of the Glass Wing Butterfly. It also symbolic meaning, at least to me. The butterfly’s wings are transparent, like the tranparency of information this announcement represents and it’s flight is the disemination of that info. Deep, very deep!

  11. kbaran

    When will Sun become profitable?
    In the last 3 years Sun has consistently lost money.
    Do you intend to change that?

  12. Houman

    Using RealPlayer…. really?

  13. john

    Nobody really care how you announce your results.
    the most important is the stock price, why don’t you care it?

  14. Gumby

    Hair is rising on my back. I have a feeling that you are poised to make a blockbuster announcement on July 30. I feel that the stock will jump 50% or more… So I just threw in another wad of cash for more shares yesterday. My fingers are crossing…

  15. Perhaps, we should start thinking about CCN, Content Centric Networking, ala PARC? It’s a new concept they are working on that is envisioned as a new method for distributing information, that virtually eliminates bottlenecks, and could potentially make irrelevant power outages, ala PGEs, recently. To check out the full monty, you can go here: http://www.parc.xerox.com/research/projects/networking/contentcentric/default.html
    The Network IS the computer!
    I guess waiting for July 30th is all in keeping with SEC regs or something, but I’m of the InformationNOW crowd, and it would be nice to have access to the information, as it is ready, and not having to WAIT.🙂 It’s like sitting on a 56K line with the new hot sci-fi movie trailers on the other end of the line…waiting. 😉
    And, since some of us ARE such SunJunkiesTM, how about creating a Java app that I could put on my cell, that would capture and download all new changes on the Sun.com site? Hmmm, Santa?🙂
    Mark
    p.s. How’d we do, Jonathan?🙂

  16. SUN’S SOLAR ECLIPSE: A Return to the Dark Age of Disclosure
    The concept of full, fair and simultaneous disclosure will be taking a giant step backwards on Monday.
    In case you missed it, Sun Microsystems CEO Jonathan Schwartz has announced that Sun will post its fourth quarter and full 2007 fiscal year earnings announcement on its web site, submit an 8-K filing and will make it available to its RSS subscribers. Ten minutes later, the release will be broadly disseminated via a commercial news service.
    Sounds great in theory, and Sun’s approach is in compliance with Regulation FD. The problem is that while Sun is living up to the letter of Reg FD, its actions run counter to its spirit and intent, and threatens to do investors a tremendous disservice by setting a bad precedent.
    Schwartz has adroitly positioned himself as a modern day champion of the people, proclaiming that Sun is making market-moving information available to the masses for the first time.
    The reality, however, which Schwartz either doesn’t understand or chooses to ignore, is that price-sensitive information is universally available–simultaneously, in real-time, and at no charge– right now, and has been since the dawning of the Internet age.
    Schwartz writes on his blog that Sun’s decision “will place, for the first time, the general investing public–those with a web browser or a cell phone–on the same footing as those with access to private subscription services.”
    Very noble, certainly great PR, but flat out wrong.
    Anyone, anywhere, can access Business Wire and its competitors at no charge on dozens of free financial portals and websites, in addition to many other traditional and online platforms. With Business Wire’s patented NX delivery platform, time-sensitive news is available at the same split second to investors worldwide.
    Sun’s decision to disclose via the web and RSS feeds, followed by broad wire delivery, is disclosure deja vu–a return to the bad old days before Reg FD made an earnest attempt to level the playing field.
    Prior to Reg FD there was a 15-minute delay that, for all intents and purposes, enabled those with privileged access to corporate information to make market decisions before the same information was disseminated to the general public.
    In September 2000, Business Wire made a bold and unilateral decision to end the 15-minute delay, and to make market news universally accessible to everyone without reservation. We remain strong proponents of Regulation FD, and the principles of full, fair, and simultaneous disclosure. That’s why we are speaking up, as others seek to erode it.
    Schwartz’ grandstanding masks several important substantive issues that Business Wire has addressed previously.
     RSS feeds are not simultaneous given the Internet’s architecture. Steve Messick, our chief information officer, recently blogged on the subject, explaining in layman’s terms why RSS feeds fail to meet the disclosure litmus test. Steve attempted to arrange a meeting with Jonathan to discuss the issue, but his invite has thus far gone unanswered.
     Given Sun’s core business, server capacity is unlikely to be an issue when Sun posts its earnings Monday. After all, Sun is the world’s fourth largest maker of server computers.
    For thousands of other listed companies, server capacity is likely to be a real issue, especially given the anticipated spikes in volume that usually accompany material news announcements.
    Sun’s potential to derive commercial benefit from companies ramping up their server capacity begs the obvious question: does Jonathan Schwartz have a hidden agenda in promoting Internet disclosure?
     Others have been quick to jump on Schwartz’ bandwagon, including Dominic Jones, who writes IR Web Report. We think that people who preach disclosure should practice it to the extent that they clearly spell out how they conceivably could benefit from a major policy shift.
    Jones is an IR web consultant; he, too, potentially stands to reap financial rewards should Internet disclosure take root, and demand for his services increase.
    It is worth noting that the European Commission rolled out its Transparency Obligations Directive [TOD] this past January in an attempt to introduce harmonized, pan-European disclosure standards across its 27 Member States.
    The EC, the Committee of European Securities Regulators, and others literally spent years studying various disclosure models. After all, they were starting from scratch, and they were anxious to do it right.
    At the end of the day, they decided upon what is often called the “North American Disclosure Model,” which is based on a push delivery, multi-channel platform that serves as the backbone of the U.S. and Canadian financial markets.
    The U.S. Securities and Exchange Commission, whose commitment to protecting the interests of individual investors has recently come under attack, should take a stand and unequivocally declare its firm support for a disclosure model that guarantees simultaneous, real-time, and unrestricted access for all investors.
    Sun should live up to its name and illuminate the path to greater transparency, instead of promoting a return to the dark days of disclosure.
    Neil Hershberg, Senior Vice President, Business Wire

  17. Hello Jonathan!
    I am married to Bernt Marius Johnsen, he works for Sun, Trondheim; Norway. I have a link to you in my blog today.
    Happy summer to you🙂
    Love from Norway,
    Betty

  18. SUNW Private Investor

    Jonathan – Wow. From a PI prospective, this is great news. Now let’s talk about the KKR PIPE deal and how it’s helped beat SUNW down to $5 from $6.70. Can you be a bit more transparent here?
    Let me guess what’s going on. The KKR deal is to provide the money to buy-back shares, and then once control is in place we’re going to see a huge buy-out deal. I just saw something similar with CMLS and amazingly the market forces dragged the price down on a Friday to a new 52wk low of $8 only to announce the CEO and Merrill Lynch buying it to take private at $11.70/sh. We know where it opened on Monday…
    All of the things going on with SUNW from the buy-back to KKR is about taking control of SUNW. I told you the stock was going down and hard the last time we, ah, communicated. Well, here we are. $5. Anyway, we’ll be under $5 again in no time, just please don’t blame the stock’s performance on the economy or SUNW employees. The markets have plans for this stock…it’s just you may or may not be aware of them. Feel free to email anytime, I’m 100% transparent with SUNW…
    Rs -SUNW Private Investor

  19. Any chance they’ll eventually be a demo along the lines of “Trusting XBRL: Using the Liberty Web Services Framework to Secure and
    Authenticate XBRL Documents” ?
    http://www.xbrl.org/Boston%20Presentations/tueday%20st.%20george/145%20XBRL-Liberty-April2005.pdf

  20. The system of nonexclusive arrangements with PR Newswire may be new
    for Sun, but not other tech companies. I.e. yesterday Yahoo notes
    that for Apple, the 8K was filed at 4:29 P.M. EST, simultaneously with
    the PR at their IR section at apple.com, and thence to points beyond.
    As it turns out, some wag will chat up anything disseminated to private services
    (e.g. via Murdoch, er, Dow Jones) within seconds on a chat board anyway.
    Although AAPL doesn’t do blogs, it didn’t take long to see how
    they passed the market cap of HPQ in afterhours trading.

  21. I really like Sun. I use it for programing everything it is much easier. Just found this blog and it is very good. Now I will try to visit it regular to check for news.

  22. Anonymous

    Wow. Forrest Gump is running Sun.

  23. Dear Jonathan Schwartz,
    “Truly Fair Disclosure” reminds me of the episode “Open Government” in “Yes, Prime Minister” by Anthony Jay and Jonathan Lynn. You are opening up a world of information, an initiative that stretches well beyond open sourcing software code. I am amused to imagine what would have happened if you had a Permanent Under Secretary of Board, known as the Permanent Secretary together with a Principal Private Secretary, with the Permanent Under Secretary of Board having his own Principal Private Secretary who is known as the Principal Private Secretary to the Permanent Secretary in addition to the Permanent Secretary’s ten Deputy Secretaries, eighty-seven Under Secretaries and two hundred and nineteen Assistant Secretaries…
    The move to Fair Disclosure would have been wrapped up as “novel”, “innovative” or “courageous” (in the sarcastic bureaucratic parlance of Sir Humphrey Appleby).
    Sun does not seem to employ Applebys, and perhaps there is an all new world out there at Sun.
    In Yes Prime Minister, the Prime Minister’s idea to bring in a Open Government is secretly neutralized by the bureaucracy that believes that Open Government “is a contradiction in terms: you can be open or you can have government.” The bureaucracy proves its point by an orchestrated play or events and the Government remains what it is – governed on “need to know” and closed.
    The move to make your financials truly transparent arise from a foundation of your overall business philosophy of good business and corporate practices which are strikingly in contrast to that of George Bernard shaw’s fictitious, but not altogether unreal, “Breakages Limited” from his Apple Cart. “The armament firms thrive on war; the glaziers gain by broken windows; the operating surgeons depend on cancer for their children’s bread; the distillers and brewers build cathedrals to sanctify the profits of drunkenness;…” Centuries later, it is so true of some corporations, and there are the likes of Breakages Limited out there who thrive on perpetuating the status quo for profit, and even if most corporations aren’t exactly like Breakages Limited, there remains a little bit of Breakages Limited somewhere deep underneath, in almost every business corporation.
    Sun appears apart. Are you trying to make the world a better place live in ? I think so.

  24. Phil

    Jonathan, this statement — “this will place, for the first time, the general investing public – those with a web browser or a cell phone – on the same footing as those with access to private subscription services” — is pure nonsense. The general investing public is on an even footing NOW with those with access to private subscription services. As soon as one of the third-party wires published an earnings news release, individuals can get it from Yahoo! or Marketwatch or at any of dozens of other free outlets — including the wires’ own homepages — at the exact same moment as someone sitting in front of a Bloomberg terminal or at a buy-side investment house. If nothing else they can get it via the SEC’s own EDGAR page, which is also free. It’s been that way for nearly a decade now. Why are you implying otherwise?
    Also, is Sun going to be publishing its results in XBRL going forward? That’s the real next step in transparency, not RSS feeds.

  25. HENG

    The street is looking for $3.84 billion + 5 cents. Are you going to deliver this time or is there going to be another. When are you going to move the stock price, that’s what shareholders are paying you to do.

  26. Chewbacca

    Think strategically. His blog post creates a lot of hubbub in the investing, trading, and tech communities (because, as most of you say, parts of what he says is nonsense, and that creates conversations). That way he uses communication dynamics to create higher awareness of the new policy, maintains the image of a staunch, fervent advocat of technological advancement while at the same time demonstrating clear entrepreneurial thinking in terms of company financials. That means the new earnings numbers will be great, and having been in the stock trading business for over a dozen years I know that the analysts look at the earnings very closely, be that sensible or not. Jonathan would be stupid to create the stir and then show bad earnings numbers. I have bought plenty of SUNW today (admittedly, at 4.80 SUNW became attractive again).

  27. Nikolaus Heger

    @Neil Hershberg – Is somebody feeling threatened there? There are certainly interesting questions about what if everyone did that. And it’s probably a valid point that the various news services also deliver instant free information. But that’s not the whole truth because whatever service is delivering reports, it is a business and it needs to make money – nothing is free in the end. It may be that services like BusinessWire add real value – and if they do, they have nothing to fear from this new development. If they don’t… well, too bad.
    It is also clear that companies will want to take complete control of their own press releases. The arguments about server capacity and technical expertise ring hollow to me – classic FUD. Maybe they will impress CEOs that don’t know all that much about technology. Professional hosting companies offering flexible server capacity are out there in numbers. Server capacity is a complete non-issue.
    In the end, this comes down to whom would you rather hear news reports from? The source, or an intermediary. I’d go for the source every time.
    I great move by Sun, I hope others follow suit.

  28. What I find interesting is the URL of the butterfly image :

    Congrats to Sun (and 37signals)

  29. Well done, Jonathan. Now if we could access all registered shareholders and give them the choice of RSS feeds and online reports or printed copies and subscriber channels, our job would be even easier.

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