The March 11, 2004 issue of BusinessWeek magazine reported that Standard&Poor’s had reduced Sun Microsystem’s debt rating to junk status. Over the course of the next two days, Sun’s stock price fell by 11 percent. Both S&P and the financial analysts covering Sun had been expressing concerns about the firm’s profitability, and urging the firm to cut costs. In response, Sun’s executives stated that the concerns expressed were overblown. They pointed out that the firm had more than $5.1 billion in cash and short-term investments, and was hardly on the verge of ruin. Discuss the response of Sun’s executives within the context of the chapter material.
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