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

To: JDN who wrote (39446)	12/18/2000 5:53:10 PM
From: E_K_S	Read Replies (2) \| Respond to of 64865

From Briefing.com 12:06 ET ****** Sun Microsystems (SUNW) 28 11/16 -1 3/4: Four downgrades in less than a week have tumbled SUNW shares almost 30% since last Monday. Prudential and Merrill Lynch both cut their ratings today after Banc of America Securities and Bear Stearns downgraded the shares last week. The caution stems from not only macroeconomic conditions, but also from recent data showing slowing enterprise server sales. The market has known for a while that consumer PC sales have softened, but only in the past two weeks has there been such widespread concern about enterprise server demand. Last week, Banc of America Securities revealed that Sun had initiated vendor rebates for the first time in recent history, indicating that December sales were probably not tracking to plan. Today Merrill Lynch has cut their Q2 (Dec) revenue estimate from $5.33 bln to $5.17 bln and their Q3 revenue estimate from $5.32 bln to $5.11 bln. Prudential says a macroeconomic slowdown is largely responsible for slowing server sales, but there are some company-specific worries too. Sun is apparently experiencing production yield shortfalls for UltraSPARC III processors which has lead to an inability to meet demand for mid and low-end server products. While that sounds like a near-term issue, it could mean pushing out introduction of new product lines that are expected in mid-2001. Nobody is saying that Sun is going to miss their $0.16 EPS estimate for this quarter, but revenue estimates are falling and numerous analysts have reduced their expectations for upside to December estimates. Prudential is the only firm we've heard questioning Sun's long-term prospects. The firm expects Sun's revenue growth will continue to decelerate throughout FY01, and the analyst cites a recent IDC report that projects UNIX market growth of 8% in revenue terms and 0% in units on a three year CAGR basis. Sun has been very successful growing market share in UNIX-based servers over the last five years, but when faced with a slowing market at a time when they are facing production difficulties, you have to wonder if the company can capture the incremental market share necessary to fuel the growth that the Street has come to expect. - Matt Gould, Briefing.com ============================================================ Maybe there are some production problems in UltraIII wafer yields but this will get better overtime. I believe SUNW's Ace-in-the-hole is their huge "potential" growth in their storage business. They have been buying companies that will help build-out their storage solution products and as they stated this sector should grow at 60%. My target for new purchases was met when SUNW stock closed below $30/share. As I already have a huge percentage of my portfolio in SUNW, anyone thinking of buying SUNW at these levels should receive an excellent return in the next 18 months. For new investors, selling naked PUTs $25 strike price out through April 2001 will yield good returns BUT you may not get the stock PUT to you. New money should nibble at current prices and ALSO sell a similar amount of April $25 naked PUTS SUQPE @ $ 4 1/4! The April $20 PUTS (SUQPD.o) @ $2.00 is not too bad either. EKS