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Technology Stocks : All About Sun Microsystems

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To: H. Wai who wrote (10162)	6/19/1998 11:47:00 AM
From: E_K_S	Read Replies (1) of 64865

HiWai - If you look at SUNW's annual report, you will notice a section that explains their use of Foreign Currency hedge contracts. I believe SUNW sells their products in U.S. dollars and may hedge a portion of their foreign (ie. Asia, Europe, etc) sales with currency future "forward" contracts. I suspect they buy an equivalent forward currency contract in YEN using Dollars equal to their estimated Asian sales, thus reducing their exposure to large changes in currency values. This technique only works if (1) they hedge 100% of their foreign sales, (2) their sales estimates are correct and (3)the correct in the money "forward" contract is bought (or sold). If the deviation in currency values change significantly and are outside the hedge, then their is a potential for a small loss. Also, I believe SUNW only hedges a portion of their foreign sales not 100%. I believe last quarter ADDI had posted some information from SUNW's annual report that explained SUNW's currency hedges. However, I could not find the actual links. ===================================================================== Here are some previous posts regarding SUNW's high end storage business that I posted back in March 1998. Sunw's investment in the High End Storage Business... Message 3778405 Lot's of potential Market Growth Message 3814053 More Sunw investments in High End storage solutions... Message 3871772 SUNW also provides fibre channel storage solutions techstocks.com ==================================================================== Hope this helps... EKS

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