Sun Micro Down 5%: Hitachi Deal May Be Limited - Analyst
Dow Jones Newswires
By Amy Braunschweiger
Of DOW JONES NEWSWIRES
NEW YORK -- Qualms that Sun Microsystems Inc.'s (SUNW)
alliance with Hitachi LTD. (HIT) may be more limited than
originally thought pushed Sun's shares down 5% early
Thursday.
"The stock ran up quite a bit yesterday based on the Hitachi announcement, and while there was a
great deal of positive news, they face challenges," said Gerard Klauer Mattison analyst David Bailey.
"It (the deal) may be more limited than what people expected yesterday," he added.
Under the deal, Sun, of Palo Alto, Calif., will distribute certain Hitachi storage products. The same
products will also be sold by Hewlett-Packard Co. (HWP) and Hitachi, creating the potential for
"channel conflict," Bailey said.
Sun's shares closed up 1% Tuesday, after the deal was announced.
Officials at Sun weren't available to comment.
Shares of Sun recently traded at $16.40, down 85 cents, or 4.9%, on volume of 11.9 million shares.
Average daily volume is 42.3 million shares.
Sun's customers and sales people may see the deal with Hitachi as an interim solution because it's
such a "dramatic change in strategy," Gerard Klauer's Bailey said.
Bailey thinks Sun may continue to develop its own high-end product, which would de-emphasize its
deal with Hitachi. However, this would be well into the future, he added.
-By Amy Braunschweiger, Dow Jones Newswires; 201-938-2205;
amy.braunschweiger@dowjones.com |
