All About Sun Microsystems Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : All About Sun Microsystems

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: QwikSand who wrote (63902)	7/4/2006 8:01:18 AM
From: Rink	Read Replies (3) of 64865

Qwiksand, not exactly. SUN derives profits from software, SPARC hardware, storage hardware, and Opteron hardware. One of the major pillars, SPARC, is and will continue to decline. SUN sells Opteron because that allows them to continue selling their software profitably, not because Opteron systems would be anywhere nearly as profitable as SPARC systems. So as long as Opteron systems just take a larger percentage of the SUN's server hardware sales, AND their server sales would remain largely steady, it means decreasing profit margins. Yes SUN is cutting costs to the tune of $500M but I am not sure that it will be enough to counter decreasing margins caused by SPARC declines. Please consider that if you are sure this will suffice you should also be sure about how much server profits decline during that same period. Because I don't know the latter I also am not sure about the former either. On a bit higher level: SUN has not presented a complete solution for SPARC declines. IMO the street thinks there is a too significant chance that SPARC declines will last till nothing is left in say six years from now. Niagara is a complete niche processor that is not gaining that much traction. Rock will not materialize for a while and is till that time subject to healthy scepticism. SUN is not admitting this as a possibility and hence has presented a cost cutting plan to take them to the Rock era (like I think they should). Still I think most investors are cautious, and want some evidence first (maybe I'm overstating what I think myself, but I think the chance of that isn't high). IMO there is not that much rear view mirror about this major event happening between start '05 and start '08. Regards, Rink

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next