Sun Micro Beats-2:Lack Of Outlook May Spark Yr-End Rally
19 Jul 19:53
Joseph Beaulieu, an analyst at Mornigstar, said Sun Micro's lack of guidance
will not only result in a lot of analysts cutting their estimates but it can
also set the market up for a year-end rally.
"The net results will be that analysts will cut estimates close to the bone
for companies that won't give any guidance for the rest of the year," said
Beaulieu. "If there is a glimmer of hope in the economy, you could see a surge
in (tech) spending, and combine that with estimates cuts that are pretty deep,
and companies could surprise on the upside."
As for Sun's fourth quarter, Beaulieu said it was "okay." The analyst noted
that it's in character for Sun Micro to continue to invest heavily in research
and development and not cut headcount, even though it led to Sun Micro's EPS
loss.
"A year ago no one would have expected the company to actually lose money,"
said the analyst. "But Sun has always been a confident company and they feel
very strongly in what they are doing, so I think they are going to continue to
take this path."
During the conference call, Sun Micro executives said headcount in the first
quarter is going to stay in line with the fourth quarter.
Richard Chu, an analyst at S.G. Cowen, said Sun Micro didn't give detail
financial projections because it simply doesn't have great visibility, which is
fine. "It's calling a spade a spade," said Chu.
CFO Lehman's comments that fiscal first-quarter earnings will be above the
break-even $3.7 billion point is "soothing," given that its European business
is headed down sequentially and customers will put off buying until Sun Micro's
new products are launched at the end of the first quarter, added Chu.
Shares of Sun traded at $14.70 in the after-hours session, according to
Reuters Instinet, slightly higher then its regular close of $14.44.
-By Donna Fuscaldo, Dow Jones Newswires; 201-938-5253;
donna.fuscaldo@dowjones.com
(END) DOW JONES NEWS 07-19-01
07:53 PM |
