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Technology Stocks : All About Sun Microsystems

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To: Lynn who wrote (14985)	3/28/1999 7:57:00 PM
From: E_K_S	Read Replies (4) of 64865

Hi Lynn - You raise some very good points regarding long term investing and the Capital gain taxes one must pay to move investment capital to another company or market sector. I continue to be positive on Sunw's prospects going forward BUT I am now over balanced in my total portfolio allocation with SUNW's recent price gains. Upon an analysis of my specific portfolio, my "potential" long term capital gain tax would be $10,000 for me to achieve the proper portfolio balance. That's $10,000 that is not working for me in the market. One thought I had was what if SUNW offered a tax free exchange of stock for some type of debt obligation like SUNW convertible bonds that paid a fixed interest payment. Reading through their annual report, SUNW plans to raise over $500 million in capital to help finance their new Silicon Valley facility to be built during the next few years. Perhaps our management could approach the current shareholders with a proposal to convert all or a portion of current shares into a convertible preferred and/or fixed debt issue and treat the transaction as a tax free exchange and pooling of interest. The convertible preferred shares could provide a fixed interest payment (less than what might have to be provided if a new issue was floated in the market) and the principal could be paid back in an equivalent amount of SUNW shares priced at market 2010 or longer. Thinking about this, there would be many ways to structure such a deal and the benefit goes to the shareholder and our company, Sun, rather than to the Feds in higher tax payments. In my specific case, I would convert 1/2 of my current SUNW holdings (subject to the tax free exchange status) to a more stable "bond" like holding (i.e.convertible preferred) that would allow me to re-balance my portfolio without having to pay out a capital gains tax now, but defer it when I actually sell the securities and get cash. ================================================================== I think our company would look at providing such an exchange if enough shareholders suggested that they do so. It would be interesting to hear if any of the other long term SUNW investors might want to participate in such an offering? EKS

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