qwik, what would you pay for a hardware company that grew its product
revenue from $8.6 billion to $10.1 billion from june 98 to jun 99?
Part of your problem in this analysis is the comparison of SUNW
against all other hardware companies for a typical P/E. SUNW
isn't a typical hardware company, because it isn't a hardware
company. It also isn't a software company and it isn't an internet
company. SUNW is a solutions company. DELL is a hardware company.
M$FT is a software company. QNTM is a hardware company. YHOO is
an internet company.
SUNW is qualitatively different than all of them. Why?? They
provide the whole enchilada, the complete solution.
Furthermore, you DON'T know how much money SUNW has made from Java
because they haven't broken out Java revenues. You ASSUME they
haven't made money on Java. However, that is beside the point.
The valuation of SUNW, at this point, is based largely on a great
brand that has taken years to cultivate.
To put it simply: investors trust them. SUNW has a good story to
tell. Your TA doesn't take such intangibles into consideration,
but if you had ever had a background in sales, you would realize
that a great brand translates directly into increased sales revenue.
You look at SUNW's current valuation like it's some kind of a shell game propagated by SUNW management, mainly because you don't
understand the significance of the changes overtaking the computer
business. That puts you right in line with HWP and M$FT: they
can't seem to grasp the significance of the internet, either.
Another reason for great optimism here on the SUNW thread??? They
don't have any competition left in the server & O/S market. The
closest is IBM. IBM is formidable and will compete effectively
against SUNW, but between the two of them, there is plenty of
market potential for both to share. I've heard recently that the
internet server market is about 5% saturated. There's tremendous
growth ahead for SUNW in just that one market segment, and no
screwdriver company is going to stand in their way.
One last thing regarding M$FT... The last time time anyone asked
Scott McNealy publicly about how StarOffice was going to compete
with M$FT Office he replied: "Who?"
That reply was most apropos. The "great satan" from Redmond is
an also-ran in the intenet age. The reason they have so much
cash in investments is because they don't know what to do with
the money. They don't have any R&D in the offing, so they're
smart enough to realize that it's better spent investing in
everyone else. Maybe they even own some SUNW (harhardeehar!!!!).
For its own part, however, Sun Microsystems has bigger fish to fry.
cheers,
cherylw |
