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Technology Stocks : All About Sun Microsystems

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To: Senthil Sankarappan who wrote (164)	1/18/1997 4:14:00 PM
From: uu	of 64865

Senthil: > The revenue growth of 19% is some what less than I expected esp > considering that they grew their revenues by 25%. > Does this concern you Addi? esp when MSFT and INTC are > growing like crazy. No! A 19% revenue growth is excellent in the case of Sun and I think they are playing it very conservative (historically they always have just like MSFT and INTC). Anyway, as far as future propsects for Sun here are my thoughts. Do you know who would be the cause for Sun's continued success and growth in the future? Believe it or not I strongly (I mean I really strongly) believe it will be Microsoft. Sun is behaving the smart guy who is taking advantage of an egotistic giant in order to grow! Sun has introduced the Java technology and this has revolutionzed the software industry, and the best part of it has been that Microsoft was caught off guard. It has been a direct challenge to Microsoft. So whats the result? Microsoft has placed its entire resources (I mean literally ALL of it) in order to change its direction from a desktop only software company to an internet/Web company. It has taken Sun's Java technology and is either integrating that with its own technology or trying to come up with similar technologies. And Sun knows this and is very happy that Microsoft is doing this! And here is why. Why is Intel so profitable? Because of PCs? Why do people buy PCs? so they can run softwares that up to now has been desktop only and made specifically for Microsoft Windows. Now the direction will be changing. Softwares will no longer be desktop only, they will be web based. This means that you no longer need an expensive PC to run for example Microsoft Word. All you need is a dummy box that can be hooked to internet and run that software. Microsoft and others including Sun will provide the software tools for this functionality to take place (as they have to some extend so far). And guess who will profit greatly from this: Both Microsoft and Sun. Microsoft will sell the software/tools (and also Sun to some extend) but then Sun will be selling the powerful servers that are needed for these softwares to run and also the NC's for people to access them. People will still be buying PCs but NCs and servers will grow like crazy! Sun will never be able to 'directly' make money from the Java technology it introduced. But as a side effect of that technology it will be selling millions and millions of more powerful servers and NCs. and that my friend will be the key to Sun's success and sequential revenue as well as earnings growth. Sun is spending millions in R&D for the development of NCs and more powerful servers (and also the advancement of Java software and further development of JavaBeans technology). Microsoft has been challenged to change its direction to that of web/internet and the entire company (and believe me I know this for sure) it is spending all its resources to adapt to the Java technology.and it will be extremly beneficial to Sun's hardware business side. Anyway, in my opinion Sun's JavaSoft subsidiery will grow and will be the source of innovation for Microsoft to adapt to push for Sun's hardware side of business. As NCs become available in the second of 1997 we will see a much more revenue as well as earnings growth with huge profit margins for Sun. It is going to be a great ride to the year 2000 and beyond. Regards, - Addi Jamshidi

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