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Technology Stocks : All About Sun Microsystems
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To: trouthead who wrote (26642)1/21/2000 10:36:00 PM
From: JC Jaros  Read Replies (1) of 64865
 
I am invested in SUNW long term, but am concerned with the high valuation. I was expecting a higher earnings number.

I kinda was too. That doesn't mean that the performance wasn't there. SUNW has a way of landing on the numbers with precise regularity. Perhaps it's because they give great guidance. They sure have cultivated a nice working relationship with the analysts who follow them. Perhaps we indies are always hoping for the 'blowout' emotionally. SUNW instead keeps it nice and steady for the institutions (which still make up the majority of shareholders).

There is nothing of authority written in the gospels of fundamental investing that says high multiples are bad. I listened to the CEO of Boeing once make the case that high multiples were conversely, perhaps a buying signal.

There's much more to the SUNW story than a P/E on trailing earnings. If P/E on trailing earnings were so omenous how do you explain the last 12 months?

SUNW is the third little pigs house (bricks) and it's become increasingly more so during the time the multiple has increased. We've got accelerating growth that extrapolates reasonably to 35% in the 12 months forward. At this point (right now), SUNW deserves a similar P/E to Cisco (IMO)

There is a dynamic of SUNW being at the center of this networking thing; this thing that is absolutely driving this whole economy. We have X amount of dollars wanting to fall in with US equities and in particular, tech equities. Of those, a few equities have classic franchises in an obvious future and a few have 25%+ growth rates, and a few have consistent uninterupted earnings growth. SUNW has it all. What's that worth?

-JCJ
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