So if SUNW is beating the paints off of HWP with their server/services solutions, perhaps the other area SUNW needs to look out for are those WIN/Intel box makers. Dell has a pretty good offering but it is at the low end and they do not really offer any end-to-end customer software integration services. We have recently heard about IBM's offerings and how their wooing some of SUNW's customers. Here is what CPQ announced today.
"...COMPAQ COMPUTER CORP. and investment units of INTEL CORP. and Deutsche Bank have entered into a $115 million deal to secure a stake in Stratus Technologies, a privately-held, Maynard, Mass. manufacturer of computer server technology. Under the terms announced on Wednesday, Compaq, Intel Capital and DB Capital Partners, the private equity investment unit of Deutsche Bank , will buy an undisclosed amount of Stratus preferred stock from
Investcorp, a Bahrain-based investment group and the majority shareholder in Stratus. DB Capital Partners is taking the largest position in the deal, agreeing to pay Investcorp $50 million for Stratus shares, according to Stratus spokesman Ken Donoghue..."
(Reuters)
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I get the impression that the competition is struggling to find the right combination of software, products and services similar to what SUNW's marketing group now provides (ie. providing enterprise customer solutions - the complete package). It appears to me that SUNW continues to remain focused on their product and services offerings. From what I can tell, IBM perhaps is the biggest threat at this time but the overall market is huge and there is enough business for both SUNW and IBM. CPQ (I also own shares in this company) continues to struggle trying to differentiate themself from a Dell type box maker vs an enterprise integrater. CPQ still is digesting the DEC merger and may pose a more formable threat in 18 to 24 months.
Right now, it looks as though SUNW is hitting on all cylinders. Therefore, the market should begin to reflect this in Sunw's stock price shortly. A forward looking PE of 40-45 would indicate a stock price of $35-$40 based on the analysts "next years" earnings of $0.88.
EKS |
