Adam,
Here is another news item released late yesterday that might partially explain the weakness in Sun today.
Jerry
SAN FRANCISCO, Jan. 29 (Reuter) - Sequent Computer Systems
Inc expects its revenue to increase at least 30 percent in 1997
on strong sales of its new NUMA-Q computer, the company's chief
executive said on Wednesday.
"Our investors ought to be able to expect at least a
30-percent growth," said Casey Powell, Sequent chairman and
chief executive.
Sequent specializes in making computers that pack dozens of
inexpensive Intel Corp Pentium microprocessors - the
same kind of chips found in personal computers -- into one box.
By harnessing the power of a team of Pentiums, a Sequent
machine has about the same horsepower as an International
Business Machine Corp mainframe computer, the favored
data-processing workhorse at big companies.
Using clever software tricks and faster microprocessors,
Sequent's new NUMA-Q line packs even more power in one box at a
fraction of the cost of operating a mainframe, Powell said.
"If what Sequent is saying is true, they are going to sell
an awful lot of these systems," said Scott Butler, an analyst
at Jensen Securities, a Portland, Ore., brokerage.
There is already plenty of attention from customers.
Companies such as Boeing Co, Unocal Corp, Ford Motor Co and the
National Association of Securities Dealers have bought the
machines, Powell said.
A quarter of Sequent's fourth-quarter revenue of $183.2
million came from NUMA-Q sales, according to company. By the
end of the year, almost all of Sequent's revenue will come from
NUMA-Q sales, Powell said.
In 1996, Sequent had net income of $7.77 million, or $0.23
a share, on revenue of $595.4 million.
Powell, the 52-year-old co-founder of the company, said he
believes the new machines can help Sequent meet the rising
demand for alternatives to the mainframe.
"There's an $178-billion base of installed mainframes out
there," he said. "About 12 percent of that market says, 'We are
actively looking to get off the mainframe.'"
Even a sliver of the business from the mainframe defectors
"is a damn nice piece of business for me," Powell said.
To pursue new business, Sequent increased its sales staff
by 50 percent last year -- part of the reason why 1996 net
income plunged 78 percent from 1995.
But Sequent is not the only vendor chasing the business.
Last week, Sun Microsystems Inc , the $7-billion vendor
of high-performance computers, unveiled Starfire, a machine
that also uses dozens of microprocessors to rival a mainframe.
Some analysts even said there is no big rush to dump
mainframes.
Butler, who rates Sequent's stock as "outperform," said
prospects are good that the shares will keep rising in coming
months. |
