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

To: JC Jaros who wrote (33613)	7/16/2000 10:34:50 PM
From: almaxel	Read Replies (1) \| Respond to of 64865

Red Herring: Dot-comming for dollars Sun's technology is widely viewed as reliable and its ability to deliver healthy returns for shareholders is exceptional. Sun Microsystems (Nasdaq: SUNW) It's time for Sun Microsystems to enjoy its day in the sun. Having often been dismissed among corporate honchos and IT departments across America as a fringe player, Sun is now considered the essential go-to technology company for any firm -- from Net startup to established brick-and-mortar -- seeking an online strategy. The maker of computer workstations, servers, and software for the commercial side of the Web now sells its products worldwide -- $12 billion's worth over the last year -- and is sitting on a $950 million backlog. As Merrill Lynch (NYSE: MER)'s Steve Milunovich says, "Sun is clearly the default purchase in the Internet era." How did it get there? With a business philosophy that might easily be confused with religious fervor. Through thick and thin, Sun has remained committed to the Unix operating system, steering clear of Windows NT and drawing the constant ire of Microsoft (Nasdaq: MSFT), a formidable adversary. Although IBM (NYSE: IBM) and Hewlett-Packard (NYSE: HWP) have remained in the server fray at the high end of the business, neither company has had the vision, focus, or best-of-breed technology to take market share away from Sun. Moreover, a shrewd bet on Java and Jini, its server and appliance technologies that allow interfacing and compatibility among diverse devices -- users can create impromptu networks -- has both driven business and resulted in phenomenal brand recognition for Sun. As Daniel Kunstler, hardware analyst for J.P. Morgan (NYSE: JPM) puts it, "They go in talking about Java, and they come out taking an order for a server." To be sure, Sun's business is not invulnerable. Risks to its growth could come from reinvigorated Unix competitors and, perhaps more importantly, the long-term threat from Wintel in the enterprise market. Nevertheless, its technology is widely viewed as reliable and its ability to deliver healthy returns for shareholders is exceptional. In fact, the only threat to Sun right now is investor skittishness about its high-flying stock. Shares have more than tripled in the last year, commanding a healthy 2000 price/earnings ratio of 64.8. "It's not a stock for the weak kneed, but it's a best-of-breed company, so we feel it's worth the valuation," says Mr. Kunstler. Indeed, with 13.7 percent operating margins during its third quarter -- generally its weakest season -- and a return on equity of 27.8 percent, including cash, Sun shows little sign of faltering. If you believe in the future of the Internet and the picks-and-shovels theory about who got rich during the gold rush, it will pay to be an investor in Sun. Ralf

To: JC Jaros who wrote (33613)	7/16/2000 11:18:51 PM
From: rudedog	Read Replies (2) \| Respond to of 64865

JC - here's another cut at what I was saying, with a few facts. Before 1992, in other words, for the first 10 years SUNW was in business, 100% of revenue came from workstations. SUNW, along with the Unix movement, created a new paradigm of network computing where the linkage of machines was more flexible and abstract than the mainframe centric architectures, or the other primary competition, which was VAX clusters and DECNet. Sun helped fuel that whole notion of distributed computing with a variety of remote process models, NFS, and the like. When HP introduced the 9000 series, and especially the 800 models, the game changed. HP was selling "big iron" into accounts which had previously been HP3000 shops, or VAX shops, or even mainframe shops. Sun did not play in that market, but they wanted to, so they drove SMP server development which resulted in the 490, 690 and other server products. At the same time, their architectural direction started to shift away from a full-up distributed model, partly because of the performance hit that their Unix file systems took in comparison to centralized server models. Development of Solaris started about that time also. SunOS was never very good at SMP. By the mid-90s, Sun had a respectable portion of revenue from servers - about 20% - and had already determined to drive up the food chain to counter the decline in workstation revenues. By 1998, the majority of revenue came from servers. There's nothing wrong with what they did - it was exactly the right thing to do IMO. But still, it seems a little funny to see press claiming that it was always that way. The Network is still the computer - more so now than ever. But it's a different network, and a different bunch of computers, and a very different architectural direction than it was during the first 10 years of SUNW's life.