That does make this more special than the common pork belly doesn't it?
I like CBS's take also!
Barron's: Cash luster in tech group
Health of Sun, Corvis, Commerce One worth a look
By CBS.MarketWatch.com
Last Update: 2:47 PM ET Sept. 21, 2002
WASHINGTON (CBS.MW) -- In the tech sector, one man's zombie is another's bargain stock.
An article in this week's Barron's looks at the sector with a new eye, one that largely ignores share performance and focuses on balance sheets with impressive cash components.
The piece lists 29 tech companies it considers in the "Bargain Bin" after calculating cash as a percentage of market capitalization.
The group can be separated into two general categories: smaller firms with large cash positions relative to their market values, and larger companies, including Sun Microsystems (SUNW: news, chart, profile), Siebel Systems (SEBL: news, chart, profile) and BMC Software (BMC: news, chart, profile), with "ample, but not enormous, cash hoards relative to their share prices, but which arguably have better business prospects and greater staying power than the smaller fry."
Capitalization of 274 percent places marketplace software maker Commerce One (CMRCD: news, chart, profile) at the top of the heap, followed by fiber optic switch maker Corvis (CORV: news, chart, profile), at 245 percent; fiber optic amplifier maker Oplink (OPLK: news, chart, profile), 221 percent; Internet content distributor Infospace (INSPD: news, chart, profile), 196 percent; storage device manufacturer JNI (JNIC: news, chart, profile) at 168 percent; and telecom gearmaker New Focus (NUFO: news, chart, profile) at 165 percent.
Among the big firms, the article considers Sun Microsystems in particular as a stock probably worth a closer look based on its cash health.
At current levels, the stock is down nearly 80 percent on the year and 95 percent below a 2000 peak at $65. The stock closed Friday up 6.6 percent at $2.88.
"Sun faces competitive challenges and has seen an exodus of top talent," the article says. "Yet it has a great balance sheet, with net cash of $4.3 billion, or $1.30 a share, as of June 30. That's about half of Sun's market value. Sun's book value is $3 a share and its tangible book, excluding goodwill, is $2.33. Sun is trading below book value for the first time since going public in 1986."
The downside for the stock appears to be $2 to $2.50 a share, while the upside could be substantial if tech spending improves or Nasdaq rallies. Assuming 30 to 35 cents in annual earnings power, Sun could trade up to $7 or $8 in the next few years, says Steve Milunovich, tech strategist at Merrill Lynch, in the article. |
