<<Just curious to know, if you do not mind, your reasoning for throwing out the shares of SUNW with loss and instead replacing them
with the shares KEA.>>>
Addi,
Don't get me wrong. I really like SUNW. However, I was very disappointed that what is normally a reasonably steady earnings generator came in .03/share shy on a measly revenue increase of 12%. As for switching to KEA, I have no further to go than to remind you that KEA was up $5 at the open today and closed up $3 3/4 compared to $2 1/8. <g> SUNW is only now returning to the price at which we sold it and I don't expect to see a return to $50 for several months(however, I could be wrong).
You may call the Y2K issue a bunch of hype, but KEA has at last count 416 y2k contracts to date, has publically announced that revenues are accelerating, and is one of the more respected y2k remediation firms out there. Y2K, for KEA, is nothing more than the key that unlocks the door to a variety of longer term contracts. And y2k remediation is at least a $300-600 billion market(conservative est). The costs incurred will impact every corporate IS budget (the same budget that would normally be allocated to upgrade networking systems) to very large degree throughout 1998-99.
You apparently don't understand that the Y2K analysis phase (where the most advanced remediation projects generally are now) is the least expensive part of remediating the problem. Fixing the code, AND then testing (most expensive) will be where the income is generated for these companies later in 1998-99.
So while every networking company out there will be begging and stealing from each other to attract the diminishing corporate IS dollar, y2k stocks will prove a relatively safe harbor, especially those with longer-term relationships with their clients. I firmly believe that this will happen and all computer related stocks, DELL, CPQ, MSFT, SUNW.... etc will begin showing signs of slowdown in the latter portion of '98. As an example, I will tell you that my beloved "spousal unit #1" works for the federal government. She relayed to me that the US Customs service has allocated $150 million to resolve its Y2K problem before Sep, 1998. The only problem is that time is not for sale and that is what is required to remediate the problem(as well as large numbers of expensive programers billing $50-100/hour).
Now where SUNW stands to profit greatly is in the thin client arena with Java. The diminishing IS resouces will create a strong demand for thin client networks that will decrease the overall capital IT cost structure, as well as reducing maintenance and upgrade costs. However, Java just isn't ready for prime time right at this moment as we all know, and even when it is, IS managers will have their hands full dealing with making the 1999 deadline.
And as a final summation that Y2K is not the "hype job" that you seem to think it is, I would suggest that you review the new SEC requirements that corporate financial statements will be required in 1998 to incorporate statements dealing with the Y2K issue and the impact its remidiation will have on the company's operational costs. If the SEC is requiring it, then I would highly suggest that it is not just a bunch of "hype".
The US is in the lead when it comes to recognizing the Y2K issue, and that is only because the rest of the world has yet to recognize the race has actually begun. Do you really expect market psychology worldwide to continue to downplay the potential risks to these companies(ie: equities) once the reality of Y2K slaps them in the face?? Many companies will be subsequently going out of business as they find their precious information systems no longer function or interact with their clients and suppliers.
To commence your education, I suggest a few URL's to peruse:
y2kinvestor.com (Tony Keye's <who I have personally met> website).
year2000.com (The mecca for Y2K research)
and for the more extreme perspective (appealing to the survivalist in all of us... :0):
garynorth.com
Call me an idiot, but regardless of the veracity of Y2K, overall market psychology will favor the most credible of Y2K companies, while computer systems providers will suffer from market fear (along with any other company whose future profitability(existence??) will be brought into doubt until 01 January, 2000 comes and goes.
Regards,
Ron |
