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Technology Stocks : All About Sun Microsystems
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To: Bong Lewis who wrote (7)1/3/1997 6:36:00 PM
From: Bill Fischofer   of 64865
 
You're correct about investing for the long term.

Short term moves of a day, a week, or a month, are largely irrelevant. But every trend begins slowly, and SUNW appears to have entered a downtrend beginning at its October 15th peak. One thing I have noticed about technical analysis is that the 200 day moving average is often a critical support/resistance area for a stock, especially when it is crossed after having been on one side of it for an extended period. If SUNW gets back above its 200 DMA within the next week or so, then this recent slide may well have been just another great buying opportunity. If it fails to penetrate and begins to slip again, then I think many TA-oriented investors would view this as a bad sign.

There is no question that SUNW, like SGI, has great technology. The question is how much money can they make on this technology? As margins contract you have to sell more and more just to keep profits level and to grow profits in such an environment you have to ensure that costs fall faster than prices. INTC can spread the huge capital costs for its chips over hundreds of millions of units, and the major PC manufacuters have grown very adept in squeezing costs at every turn. This is the competitive environment that SUNW now lives in.

Are there reliable estimates of the number of Sun workstations and servers out there and how many are shipped per year? I'm not a bear here. I'd like to own SUNW but I'm having trouble justifying a purchase at this time.
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