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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: QwikSand who wrote (24419)	12/9/1999 11:17:00 AM
From: rudedog	Read Replies (2) \| Respond to of 64865

QS - re: I don't care whether rudedog is bearish on the stock. I have not been as bullish on SUNW as some here, partially because of my experience with DELL last year - a fundamentally sound company, very well managed, growing like mad, but pretty much flat all year and likely to remain that way for a while yet. I was not as familiar with some of the underlying trends driving SUNW as I was with the Intel vendors, and have been getting up to speed over the last few months. I have considered getting back into SUNW - I would do that with LEAPs if I was convinced of the long term appreciation since I get a lot more leverage that way. I got 10X in a month on CPQ in November with option plays, clearing more than $1M on an investment of $92K... hard to beat that and no way I could have done so much with so little on SUNW in that time period. BTW I don't think anyone would characterize CPQ as a high flyer at the moment and that was one of the reasons I did so well - the very low premiums on the Nov calls at the beginning of the month provided huge leverage (and also a good chance to lose my money of course...) But SUNW has not presented me with the opportunity I was looking for - namely a significant pullback where investors lose confidence and the option premiums drop. Damn stock has just been too strong... One of the questions many DELL investors have been asking is "what is the next DELL"... some made the claim that DELL will be the next DELL, obviously wishful thinking. But looking at SUNW's run, and of course speaking strictly from a stock performance viewpoint as the companies are hardly comparable on any other metric, SUNW sure looks a lot like DELL looked in 1997 when I first picked it up, except it has run up even faster. So perhaps the answer to that question is that SUNW will be the next DELL. I had been concerned that the stock price was so far ahead of the fundamentals (see the analysis I did on SUNW's business case vs. CPQ's enterprise group) that investors might wait for it to catch up. But in the last few days, I have convinced myself that SUNW's rise has almost nothing to do with the underlying business as it exists today. DELL was shooting up because they recorded quarter after quarter of record growth, outgrowing their rivals by 2X and 3X and doing it profitably. When that growth slowed (as it inevitably had to do), DELL stalled. But SUNW is getting valued for a potential that has little to do with the current hardware business - I think the smart moves they have made both with the high end technology they got from CRAY and turned into Starfire, and the development of Java and its children as a rallying point that developers and customers alike could identify with (often without really understanding much about what it really was), created the impression that of the big systems vendors, only SUNW really "got it", and that they will continue to "Get it". So SUNW starts to look like a combination of a solid technology company which can execute well in its core product line, combined with the agility of an internet startup in terms of taking new directions and catching mindshare. One of the reasons I presented the contrarian positions on SUNW's current market share and product penetration is that those factors could not possibly be driving the stock price... SUNW is solidly in the pack on those metrics but not a leader on any of them. It is the notion that SUNW could change the game at any time and break out, that they have done so a number of times recently (as when they went from having no high end offering to absolute dominance of the top of the Unix SMP totem pole in a year), and that in fact they are the most likely of the big players to do so, which is what is exciting the investment community IMO.