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Technology Stocks : All About Sun Microsystems
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To: Jean M. Gauthier who wrote (8746)4/1/1998 4:55:00 PM
From: Alok Sinha  Read Replies (1) of 64865
 
According to MS analyst Thomas Kraemer's report 3/11/98,

"We believe that the worst-case scenario for fiscal 1998 third-quarter (March) EPS is $0.57."

The report also states

"Management cautioned that Asia weakness might cause lighter than expected revenue growth but expressed comfort with the consensus estimate of $ 0.60"

I think consensus now is 58 or 59 cents. The MS analyst reduced his estiamte from 62 cents to 60 cents. The reasons he outlined that SUNW is comfortable are:

"First, much of Sun's expense growth is back end loaded, as the company has deferred much of the headcount spending to allow flexibility to make earnings projections. Second, the company is seeing a continued mix shift towards higher margin servers, storage and richer product configurations. And third Sun projects US revenue growth in high teens and European revenue growth in high teen to low twenties"

Keep in mind the the report is now 3 weeks out of date, and I have not seen any further guidance from Sun.

An intersting piece of info towards the end of the research article:

"Sun has virtual reporting and gets profit and loss versus plan every week. We believe Sun runs the tigtest ship in the server business, and we like the additional room the Co. has to maneuver" (on the expense front)

I wondor if the EPS est. downward revisions by some analysts is due to info leaked from the weekly reporting (although these analysts' did mention that they did not receive any guidance from mgt).

Hopefully the lower consensus figures are easier to meet.

Regards

Alok

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