World's greatest hardware guru retires

The Loon finds his hedge


Regular Register readers will recoil from the same rush of sadness that hit us earlier today after learning that Merrill Lynch's star hardware analyst Steven Milunovich will retire in September.

Dignitary? Luminary? Oracle? Power broker? Server sleuth? Storage stalwart?

It's almost impossible to find the right word or even pair of words to describe Miloonovich and his impact on the hardware market. No analyst had more influence on shooting the likes of Sun Microsystems and EMC right past the NASDAQ's upper bounds during the boom and then trouncing these proprietary demons during the crash. No other man had the resolve to call Intel's Itanium processor an "industry standard" even when just a few of the chips sold per quarter. It takes real guts to be that wrong in front of your peers, your bosses and your customers and not apologize for it.

During the glory days, Miloonovich could make or break a company with a single research note. More often than not though, he was making a company - upping his share price forecasts way, way above what financial fundamentals would seem to dictate. "The Loon" - as he's known is these parts - wasn't alone in this practice; he was just damn good at it.

Like any good cheerleader, Miloonovich would rush to back the cause of the moment with pom-poms waving and his skirt at mid-thigh. He cheered Sun for locking customers in to Sparc and Solaris and insisted the company could outdo its $60, $70, $80 share price. The Loon even ridiculed Sun CEO Scott McNealy for issuing too conservative revenue predictions and for having the gall to count revenue from the likes of Enron and Excite only after the customers had actually paid for their servers instead of when their orders were booked. The Loon would call Sun a disaster a few months later.

The Loon championed server appliances in 1999 as the next big thing only to call them a lost cause a couple of years later. He loved EMC one year, hated it the next and loved it again. He praised the Compaq/HP merger, and then, like a fickle teenager, called for a split of the companies a couple years later.

(One of Miloonovich's more famous quotations was the early 2000 declaration, "If you want to know where the computer industry is going, ask Sun" which was followed by the declaration that Sun was "becoming irrelevant" three years later.)

Unlike some of his peers, The Loon didn't bother with hard nose financial analysis or thorough checks with sources to find out what was going on at a company. He did, however, read the likes of The Register and CNET to see what a vendor might be releasing next and what was hot at the moment. That's how he found out the iPod was selling well and that Dell was improving server sales. We've never quite figured out the Itanic love thing, but we're sure it had nothing to do with wanting to stay on Intel's good side.

Miloonovich's skill for following the wind wherever it blew and never being ahead of the curve earned him lofty praise.

Here's Adam Lashinsky at Fortune describing The Loon's retirement,

"Say it ain't so, Steve.

"Steven Milunovich, perhaps one of the most oft-quoted, recognizable and opinionated research analysts covering technology stocks, is calling it quits. The 44-year-old tech-stock strategist at Merrill Lynch is retiring after 22 years in the research racket.

"As for whom journalists will call for pithy observations about high tech, 'I'm afraid you're going to have to live without my brilliant insights from now on,' he joked."

Good one, Steve.

Miloonovich was less forthcoming in our interview.

"No comment from the loon," he wrote in an e-mail.

Fortune, however, did get the real gossip. The Loon isn't retiring at all. At 44, with his piles of cash, Miloonovich has decided to start up his own hedge fund.

"I'm looking for a new challenge," Milunovich told the rag. "There comes a point when, as a consultant who suggests to other people what they should do, you want to do it yourself."

Good luck, Steve. We hear the upcoming Itanium-based Dell DJ is going to be huge. ®


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