Twister, I'll take my chances that Scott will not fall prey to the same shortcomings as Mr. Noorda. In fact, three years ago I was at a Sun analyst meeting--when Sun was trading at $10 per share and the almighty analyst community (ha, ha) was trashing him mercilessly. I could hear and see the frustration, but he never lost his conviction about networking and Sun's plans. Anyway, an analyst asked why someone should buy Sun when Novell was taking over the world? Scott, just shook his head, and said why would anyway own a one product company whose operating system didn't even run applications? Further, he pointed out that Sun was trading at less than .8 times revenues and Novell was trading at 7 x's revenues. Few technology managers possess these insights.
Separately, I'll gladly compare Sun's server bookings with any PC company's server business. Sun's server business is growing at 50 + percent. Last quarter Sun's Oracle business was up 80%. Further, I am buying Sun as a company--with all its wonderful technology and products--so to say it is unfair to compare it to Intel as a company is a bogus argument.
My point about Intel's cap ex versus depreciation is this: If it is a perpetual situation that cap ex exceeds depreciation then earnings are over stated.
People go nuts when I say this, but Sun deservers a much higher P/E than Intel. First, its growth rate going forward will be much higher; Second, it possess a broader portfolio of technologies and less fixed expenditures and thus will suffer less when a downturn occurs. Third, it has Java, whatever it is worth. Fourth, it has much lower margins and there is room for improvement. Intel's margin will never go up from here.
Joe Rizzo
JMR Trading |
