Re Sun (d'etre?)
When Bruce and I were spreading the gospel over on the Fool, he offered some interesting GG remarks on a company (SUNW) occasionally discussed around here, so I thought I'd copy them...
tekboy@absolutelynolifeleft.com
Subject: Re: 5 reasons Date: 10/11/99 6:09 AM
Author: BruceBrown
Not sure how to classify SUNW according to Moore's schema.
Not sure the original poster who is in love with the 5 greatest LTBH gimmies wants to hear what Moore says about SUNW, but here goes - from the manual of course. Of course, it is no gorilla as we know in the sense of the word.
We know that Sun is a major server company, as well as a member of the consortium of vendors (Sun, Netscape(AOL), and Oracle that is promising freedom from Microsoft domination. ;-)
Moore says this about Sun under the section entitled One Final Evolution: The Shift From Purchased Products To Outsourced Services
"Sun Microsystems is also not making this turn, but it has good reason, as its Internet-centric product offerings are still benefitting from tornado market forces."
Later in The Gorilla Game, Moore says:
"The key point is that these companies are not what most people think of as Internet stocks. They are instead Internet-affected stocks. Hewlett-Packard and Sun can serve as representative examples. The former's stock has gone down and the latter's has gone up because of each company's response to date to the Internet. The Internet is thus affecting their stock price. But at the end of the day these remain enterprise systems companies, and their price/sales ratios may be expected to regress toward the mean in that category. That is, HP with some decent work can be expected to get its stock price back up, and Sun, despite heroic efforts, can be expected at some point to lose valuation, not because of any mistakes, but because of the tendency of mature market systems to restore equilibrium at the midpoint of oscillation. This 'regression toward the mean' is the whole underpinning of value investing, and it works - provided the market system is on Main Street."
Tekboy and myself are not trying to say there is not money to be made in a stock like SUNW, EMC or good grief - JDSU. It's important to note that they are not gorillas and are involved in an entirely different game called a royalty game made up of Kings, Princes and Serfs. I would agree that JDSU and EMC are Kings in their respective areas. SUNW, I would venture, is not on the throne.
BB |
