Hi Sonki - We will have to be patient and see if SUNW
can consolidate at these levels before moving higher.
Complete Financials: March 1999 Exchange NASD
FY END JUN
ISSUE DATA (05/07/99) PER SHARE DATA RATIOS
Price $ 58.06 EPS (TTM) $ 1.13 P/E (TTM) 51.47
52W High $ 72.50 Div. Rate $ 0.00 Yield 0.00 %
52W Low $ 19.19 Book Value $ 5.70 Price/Book 10.19
Shrs Out 773.86 Mil Cash $ 2.58 ROE (TTM) 23.89 %
Float 750.60 Mil Rev (TTM) $ 13.79 ROA (TTM) 14.66 %
Mon. Vol 335.37 Mil Curr. Ratio 1.89
Beta 1.45 LT Dbt/Eqty 0.00
My estimate for FY 2000 is $1.40-$1.60 assuming a 25% growth rate.
Today's price already reflects a 30-40 (next year) PE, so the market
expects much higher growth (in Sales & earnings) going forward.
This is quite possible as many new revenue streams will contribute
to their overall sales in the future....but we may already be at the
higher end of my expected price target. However, my crystal ball
begins to get very fuzzy when I try to look out more than a year.
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Therefore, I sold Oct $72 1/2 calls on 1/3 of my SUNW shares for
$8.00 to hedge my long term gains.
IBM stated that over 24% of their sales are internet related which
bodes well for SUNW. If you look at the "Internet" plays,T, IBM
AOL, MSFT and SUNW; T, IBM and SUNW IMO are the best "value"
investments given the PE of the other players.
SUNW's PE may be able to expand more in the future if the market
values Growth, free flow cash flows, and no debt AND SUNW can
generate new revenues from their AOL consulting partnership.
FY 2000 will be the key year for SUNW as many of their new
projects and prior investments will begin to contribute
to earnings (software, storage, services, etc.).
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Does anybody know what services SUNW's facility in Sacramento, CA
provides? I noticed that they have a FOR Lease sign in front of
their building. I wonder if they are moving these services back
to Silicon Valley or consolidating to another building locally.
EKS
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