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SUN MICROSYSTEMS FILES FOR A SHELF REGISTRATION

NEW YORK-Sun Microsystems Inc., the Palo Alto, Calif., developer of the Java software programming language, has filed a shelf registration with the Securities and Exchange Commission for $1 billion in senior unsecured debt.

A shelf registration allows companies up to two years from the filing to sell securities publicly as soon as market conditions are favorable, provided they regularly update the SEC on annual, quarterly and related reports. This flexibility saves issuers time and money associated with the public sale of their stock or bonds.

Personal communications products based on Sun’s Java-enabled digital signal processing will be able to derive functionality from the wireless network or the Internet without having it resident in the subscriber equipment. Texas Instruments Inc. announced in October that its Wireless Communications Business Unit will incorporate Sun’s EmbeddedJava and PersonalJava specifications into its communications platforms for end-user equipment the company plans to sell in 1998.

Moody’s Investors Service accorded Sun’s planned debt issuance a speculative grade rating of Baa2 with a stable outlook. But a recent report by Alfred J. Pastore, managing director, and Craig Fitt, senior credit officer in Moody’s corporate finance group, articulated some concerns about Sun’s strategy.

Alone among major manufacturers of Unix-based systems, Sun hasn’t brought out any products incorporating the Windows NT put out by its rival, Microsoft Corp., they noted.

“In order to prevent the company from becoming isolated on Unix, however, Sun has developed Java, a software programming language capable of running on any operating system, and (one) which is generating widespread industry support at this time,” Pastore and Fitt said.

“However, in Moody’s view, the risk to this strategy is that Sun’s competitive position could weaken over time if Java doesn’t become accepted as an industry standard … the rating agency does believe that (Windows) NT will make significant inroads over time.”

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