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Technology Stocks : Sun Microsystems
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To: Gutterball who wrote (622)4/16/1997 9:30:00 PM
From: Bill Fischofer   of 630
 
Re: Enjoy the ride

Depends on your time horizon I suppose, but for the present this elevator has a lot of down buttons pushed.

Look at a weekly (not daily) chart. SUNW has had this "about to swan dive" look to it since its October 96 highs. Divergences all over the place. The Point&Figure chart looks equally precarious. If it breaks 25 1/2 things could get very ugly.

No, I'm not a gloomster by trade. I've wanted to own SUNW for the past year but it never looked quite right. I think what's got some folks (I count myself among them) concerned is Scott McNealy's recent proclamation that SUNW is a software company (see news.com for the story). I read this as the first public admission that SUNW can't fight INTC and knows their hardware business is going to face severe margin pressure in the years ahead. Can SUNW make the transition to being a software biz? Show me a hardware company that has managed this feat at all, let alone smoothly. If McNealy can't take on Andy Grove, what makes him think he can take on Bill Gates while dragging the capital structure of a waning hardware business behind him? It's also bizarre that McNealy neatly divides the enterprise computing world into three segments and fails to even mention IBM as a player. I think that would come as surprising news to many corporate MIS types. What exactly is SUNW's game plan here?
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