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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: JC Jaros who wrote (52657)	11/4/2000 9:02:04 AM
From: rudedog	Respond to of 74651

JC - well, My SUNW investment was designed to make money, which it did - more that I can say about my option plays on MSFT <G>. But let's see if I follow your logic here. SUNW pays $2B for a company which has technology based on very old processors which are at end of life, and sales in the hundreds of units. They do this because the real intent is to develop a NAS offering based on SPARC and Solaris. We have to assume that for some reason SUNW could not just develop a NAS product on their own, despite the fact that others have developed pretty decent NAS products in a matter of months. They didn't get market share since Cobalt had none. They don't get much of a customer base since Cobalt's customer base was also in the hundreds. And somehow, despite the fact that in the scenario you propose, SUNW will not use the technology, customer base or market presence of Cobalt but will morph the product to SUNW technology, this purchase was worth $2B. And SUNW has to do pretty much the same work that they would have done to build a product from scratch. Not to mention the fact that the cost basis for a SPARC based solution puts it out of the park, even if SUNW uses SPARC parts which are too low on the speed curve to work in the standard product line (and are therefore essentially free). Courtesy of some folks who know more than I do about the economics of those parts, we know that a minimum chipset combo for a SPARC based appliance is more than twice the cost of the competing Intel-based designs, which by the way also have higher performance. And that includes buying the Intel processors and assuming the SPARC processors are free. I think I would be willing to bet against that. The more I look at it, the less sense it makes. It sure looks like a FUBAR deal to me.