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Technology Stocks : All About Sun Microsystems
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To: Alok Sinha who wrote (27502)2/9/2000 5:04:00 PM
From: Steve Lee  Read Replies (3) of 64865
 
Alok, I didn't short SUNW. Although I thought it was unlikely, I noted the possibility that SUNW might break above its previous high today, which id did. And I said in that case, I would not short SUNW at that time. So I didn't. I think it would be very dangerous and possibly expensive to short a stock when it has broken out, regardless of whether it is fundamentally overvalued.

I don't foresee the "downfall" of Sun. But I do see it facing more competition in the high end computing segment. This will force Sun to compete on price, which will bring down margins. When a 600 MHz processor has to compete with a 1 GHz plus competing processor manufactured in massice volume by the world leader in silicon manufacturing, it is going to have trouble.

SUNW has enjoyed its high margins in the pre Itanium days because it has had no competition that can match it in terms of available hardware, cost, performance etc. This will change this year. For those that have asked for a timescale on when SUNW will begin to suffer from Itanium competition, I say it will start losing market share this year.

This is more wide ranging than competiton from Intel. The faster Intel chip will be available to anybody that reckons they can build an Itanium based machine and anybody will be able to write OS and application software for it. Sun will face competition from tens of the world's biggest computer companies, with the software from each platform being able to run on any, except for Sun. Why would you buy a Sun machine in those circumstances?
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