Sun Micro readies for long-awaited server launch
(UPDATE: adds details, investor and analyst comment)
By Peter Henderson
SAN FRANCISCO, March 7 (Reuters) - Network computer maker Sun Microsystems Inc. (NasdaqNM:SUNW - news), which has repeatedly denied rumors of delay in its new line of servers, said on Wednesday it would launch a mid-level box in two weeks.
The machine based on Sun's new UltraSPARC III microchip will debut in New York on March 21, Sun said in an invitation.
The new line will be key to future Sun growth and should help it defend from attacks by Hewlett-Packard Co.(NYSE:HWP - news) and International Business Machines Corp. (NYSE:IBM - news), two of the myriad competitors jostling for space in the high-margin server market.
Such machines, which run computer networks and host Web sites, command much higher premiums than highly commoditized personal computers.
Shares of Sun, which are just off their 52-week low, ticked up $0-3/8 to $22-5/8 on Nasdaq in a little changed market for technology hardware stocks at midday.
The recent stock weakness has made Sun a good buy, said Samuel Jones, chief investment officer at Trillium Asset Management in Boston. He has been buying Sun recently and has around 100,000 shares, which would be worth about $2.2 million, of some $500 million in equities managed.
``It fortifies the Sun story for me,'' he said of the server launch, although he added that he looked primarily at Sun's operating margin, which has been improving year-over-year, and multiples such as the price-earnings ratio to growth, which indicated Sun was a good value.
Sun, which last year took first place in total U.S. server sales by revenue, according to Gartner Group, launched the low- end machine of the new range last year to strong demand.
Chief Operating Officer Ed Zander had said Sun would announce the server this quarter and begin shipping in volume in the following quarter.
The stock recently dropped to $18 from the year high of $64-11/16 set at the beginning of September before the economic climate began to sour.
That economic weakness and previous high valuations had hurt Sun's share price more than concerns about the UltraSPARC launch, since Sun has repeatedly said it would be on time after early slippage, said Mark Specker, managing director at Wit SoundView brokerage.
``We think Sun will probably not resume its enormous outperformance of competitors,'' he told Reuters, pointing in particular to additional pressure from Microsoft Corp.'s (NasdaqNM:MSFT - news) Windows 2000 operating system, which runs networks that compete with Sun products, especially toward the low end.
``Having said that, Sun looks likely to remain a very successful company over the medium and long term,'' Specker said. |
