From Forbes.com, yesterday. Could this by itself explain a 4% gain on above-average volume today?
--QS
Market Scan
Sun Also Rises?
R.M. Schneiderman, 08.03.06, 12:18 PM ET
Network computing company Sun Microsystems may be beginning a significant turnaround reminiscent of one made by Xerox four to five years ago, according to a Thursday report by UBS Investment Research.
Benjamin Reitzes, an analyst for the research firm, said the market initially appeared uneasy about Xerox (nyse: XRX - news - people ) chief executive officer Anne Mulcahy, who implemented cost cutting initiatives.
"Many aspects of [Sun's] potential turnaround seem familiar such as both [companies] have large, sticky consumer bases, high market share, hidden assets, bloated cost structure and solid cash flow potential," Reitzes said.
Following a meeting with Sun's chief executive officer, Jonathan Schwartz, the analyst said that the company may be able to turn itself around even faster than Xerox.
"[Sun] doesn't have to worry about high debt levels," he said. "Xerox also had to deal with earnings restatements, [and] with Sun's net cash position and current revenue growth, it seems much stronger than Xerox was a few years ago."
On July 25, Sun (nasdaq: SUNW - news - people ) posted fiscal fourth-quarter revenues of $3.828 billion, up 29% compared to the same quarter from a year prior.
In a press release, the company said revenues for the period rose in large part due to increasing acceptance of its Solaris 10 operating system.
Reitzes reiterated a "buy" rating and target price of $6.25 on Sun.
"We believe shares can gain momentum," he said. |
