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Technology Stocks : SUN microsystems: 7/18/96 quarterly report - BIG!
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To: cfimx who wrote (328)9/17/1996 7:52:00 AM
From: Joe Rizzo   of 386
 
Twister, Sun always lags in the short term when there is excitement about intel because it is misunderstood by Wall Street and people like you. "It's just a box maker." "Java hasn't contributed a dime." I'll concede that Sun's major source of revenues is boxes, but these are very high end boxes that cost $30,000 to $1 mm. People that think Java is worthless because it does not contribute bottom line dollars currently are missing the point. This is like saying prime undeveloped real estate is worthless. How much do you think Microsoft or IBM would pay for the rights to JAVA--$2 billion, $3 billion. I do not know, but I assure you it is alot.

Further, Sun is a fabless semiconductor company and consulting/service company. Sparc is being designed into many products. E.g., C-Cube Microsystems, is planning on using microsparc in its set-top box system under development. Scott indicated in a recent interview that companies are "rabid" over intranet/thin clinet services.

Ultimately though everything has to flow to the bottom line to justify a stocks value. Last quarter, Sun's orders were up 35% and backlog grew to record levels. I understand that high end servers are still not available for 30 to 45 days despite improvements in component supplies, an indication that demand is very strong. I believe Sun will do $4.00 in calendar year 97 and $6.00 in 98 as Java licensing dollars start flowing in. Finally, the beauty of Sun's business model is that net income actually flows to shareholders; it is not necessary for massive capital expenditures like Intel to sustain its business.

Joe Rizzo
JMR Trading
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