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Technology Stocks : All About Sun Microsystems
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To: zbyslaw owczarczyk who wrote (38998)12/11/2000 6:45:39 PM
From: uu  Read Replies (2) of 64865
 
After getting back in SUNW a few months ago at $108/shr (pre-split or $54/shr post split) I think SUNW's rise maybe limited. The growth will of course be there but not as much as it had been anticipated.

The main reasons behind Sun's lack of previously over-estimated growth include the slow down in the .com companies. The main fortune of Sun has relied on the fundamental business direction of the new economy where .com compaines play a major role. While .com companies continue to play a major role, their numbers are decreasing very rapidly and the number of .com companies coming to exist has also decreased dramatically due to lack of the necessary venture/seed funding. As a result of a domino effect Sun's growth is impacted negatively as is the growth of companies such as Exodus.

Longer term the stock will continue to do good, but I do not expect for the stock to rise by 50%-100% on an annual basis. I think those days may very well be behind us and a gain of 10%-20% on an annual basis will be more like it (which is still very impressive). However at this time I do not believe SUNW deserves a P/E of over 60 and a market cap of over $100 billion. I think a P/E of about 30-40 and a market cap in the range of $60-$70 billion (or a stock price of $22-$27/shr) will be more reasonable based on the current conditions and the future outlook of the gorwth of the server centric computing model that relates directly to Sun.

I continue to hold my small number of shares at $54/shr but will not be adding till (and of course if) we get a 30%-40% decline from the current levels, and will most likely sell my shares when the stock hits the mid $50's (which ought to get there based on its current oversold condition).

Of course all IMHO and I have proven to be wrong many times in the past!
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