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Technology Stocks : All About Sun Microsystems

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To: Michael F. Donadio who wrote (7864)	2/23/1998 6:50:00 PM
From: uu	of 64865

Michael: > With the Sun vs Microsoft case starting next friday are you hedging your bets against a possible decision in favor of Microsoft? Oh not at all (I am still holding half my position which is a considerable number of shares - to me anyway). As for the law suit and Sun vs. Microsoft, IMHO it is taken that Microsoft has no case what so ever and in fact Sun will prevail without a question. This, however, in most part has been taken into account and once done will have no effect on either SUNW or MSFT (well it may have little positive effect on SUNW). The reason SUNW (IMHO again of course) is not performing so well is due to a perception that it will not meet the earnings expectations for this quarter mainly due South East Asian problems. While I believe this will not be the case and SUNW will make out the loss in the earnings in Asia via its sales in Middle East, Europe and North America I am a bit (just a bit) concerned about the earnings myself. And this basically goes to past experience with Sun and other high tech bellweather companies that after a strong few quarters, increase their R&D and other expenses dramatically in order to set the stage for the next take off in their revenue and earnings. This will have a negative effect on the earnings in the very immediate short term. And unfortunately with high beta stocks such as SUNW this negativity is not taken lightly and the stock is unjustifiably punished harshly. Oracle, IBM, HP and Sun (to name a few) have all gone through similar problems in the past and some of them may continue to do so (in my opinion Sun will be among them). So basically while the short term expenses will benefit the longer term prospects it does not do any good to the stock in the short term. Ordinarely I would not have touched any of my SUNW shares, however with a possibility of a sharp sell off of high techs by the end of March through end of April, the degree of risk for punishment of high beta stocks has increased dramatically (for my taste anyway). And that is why I sold half my position of almost 4 year old SUNW. If I am correct in my assumption that there will be a sell off of tech stocks in late March through late April I am going to get the best bargains of the century by buying semi stocks, and companies that will define the 21st century technology such as SUNW at that time. Regards, Addi Jamshidi

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