Sun remains open to plan for NZ development lab

By PETER GRIFFIN

Sun Microsystems is still considering opening a research and development lab locally and says it is eyeing at least one local company with a view to investing in it.

The servers and software of the US giant power many major corporates. The company has been weighing New Zealand investment options for some time but has yet to commit any cash.

However Stefan Rust, a director of venture and strategic investments, corporate strategy and development at Sun, said the company was still in serious discussions in New Zealand.

"We've looked at one company in particular in New Zealand and we're looking at setting up a research lab in Christchurch," he said.

"Those are still out there," he told the Morgo 2004 investment conference at Wairakei on Friday.

The lowest investment Sun makes is US$500,000 ($766,000) while the highest can be about US$8 million. It usually looks to invest in more developed companies but lets its investments maintain their independence.

"We don't take a board seat, but we like to have a board observer. We like to see revenue in a company before we invest," said Rust.

Sun itself has grown by acquisition, making 40 purchases of various size in the last eight years.

Some of those buys have contributed key components to Sun's best-known products - from Star Office to the Java standard.

"The acquisition of Cray Research led us to being a server company. Scott [McNealy, Sun's chief executive], saw Java for the first time and pooh-poohed it. There are 500 million handsets out there with Java on them today," said Rust.

Sun already has a sizeable operation in New Zealand, but its experience in this country has been soured by the breakdown in its relationship with key partner Solnet.

The partnership ended in legal action, while Solnet's executives went on to form a company trading independently of Sun called Solnet Solutions.

In the year to June 30, 2003, Sun turned a profit of $5.7 million on revenue of $83.7 million.

Last month it closed its Wellington-based solutions centre with the loss of a handful of jobs.

The closure also saw telephone support of various Sun products shift to Sydney.