Hi Charles - I too am bullish on Sun for the next 2-3 years and am anxiously waiting to see how our management plays their cards to grow this company. I believe Sun will report a very good quarter (atleast meet analysts expectations) due to VERY strong high end (domestic) server sales last quarter.
This should be very good news. This is Sun's strongest revenue producer and (even with Asia concerns) new server sales will continue to be strong! Based on recent research, I learned two additional facts which I will be monitoring to see how our management deals with these opportunities.
First, Sun's low end offering continues to shrink as a percentage of their total revenues. The low end boxes although do not produce significant revenues, is important for (1) expanding the customer base for future high end products (remember small companies grow into larger companies) and (2) shows the industry that Sun can compete in all market sectors.
Ed Zander's announcement (1/13/98) regarding the "Darwin" low end product line IMO is the first of many new products that SUN has been developing to address this area. Look for more workstation type boxes that will compete in price and performance (with upgrade paths to larger SUN solutions) with the WindowsNT offering. The one most important piece of software will be Sun's "optimized" JVM. Netscape will be releasing an updated "pure JAVA" browser in July 1998 which may allow SUN to better optimize their server-side JAVA machine
(http://www.news.com/News/Item/0%2C4%2C17705%2C00.html?ndh.idirect).
Around the same time Novanux (sp?) a wholly owned subsidiary between Novell and Netscape will release new products that will better allow Novell's installed customer base (Novell has 60,000,000 seats) to utilize their "pure Java" JVM, setting the stage for SUN to expand their product & service offerings into their business enterprise market. Most all of these users will be using the Netscape "pure-java" client browser which will allow each company to optimize their server-sider JVM.
Also, with Sun announcing their partnership with Intel to develop the new Merced 64-bit platform to run on Solaris is just another opportunity to expand their product offering in 1999-2000.
Therefore, this investor is excited to see how all this develops in the future. The key is providing enterprise customer solutions, which SUN has an excellent track record in delivering.
Second, unaware to this investor, is SUN's big R&D investment in the high end storage solutions including fiber channel and RAID disk arrays that compete quite well with other company offerings from IBM, EMC and Storage Technology. I was told that the big payoff in this area will not be noticed until 2000 but between now and then it is viewed by Sun's Management as a "huge" growth area for both revenues and margins.
In summary, Sun is positioned quite well in several large growth areas for the near future. It is now up to our management (and perhaps a little bit of 'industry' luck) to deliver these new integrated technologies to both small and large enterprise companies. Based on past performance, I believe they have a very good chance to execute their business plan.
EKS
All investor's should do their own research and by no means take any of the above as "investment advice" or "facts" as this is only one investor's observations. This investor does own a position in the company and may be viewing the glass half full rather than half empty. |
