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

To: techtonicbull who wrote (39649)	12/23/2000 2:30:36 PM
From: Sonki	Read Replies (2) \| Respond to of 64865

As far as the new server line is concerned, however, Sun officials deny any delay and say they will complete its introduction by midyear as scheduled. And unlike a bevy of other high-tech companies such as Microsoft Corp., Sun hasn't issued any earnings warnings for the current quarter, in which it previously said it expects to see revenue growth in the "high 40s" and profit growth equal to or slightly less than that. --------------- rest of the story ----------- Sun Microsystems Aims To Weather Market Drop By DAVID P. HAMILTON Staff Reporter of THE WALL STREET JOURNAL Sun Microsystems Inc.'s sales have rolled steadily this year, despite problems in the New Economy businesses that use its computers. But even Scott McNealy, its bullish chairman, admits the future is looking a bit dimmer. Company Profile: Sun Microsystems "There is no question that the U.S. economy is cooling off," Mr. McNealy noted this week in an e-mail to employees. "It may be a soft landing. It may be a prolonged period of economic indecision and fluctuation. I can tell you no one knows for sure." While stressing the need to "continue the cost controls we put in place this quarter" and hinting at a hiring slowdown, Mr. McNealy noted that European and Asian sales remain strong, and insisted that Sun, of Palo Alto, Calif., is "in the best financial condition and market position in our history." Now the big question is how well Sun can continue to weather likely macroeconomic and financial-market turmoil. Sun, whose server machines power some of the largest Web businesses, has repeatedly exceeded even optimistic earnings expectations, and revenue growth zoomed as high as 60% in the third quarter. But its stock has been on a roller-coaster ride. Investors pushed up its shares to a record $64.66 on Sept. 1, briefly giving Sun a higher market capitalization than International Business Machines Corp. -- which in its most recent quarter boasted revenue four times greater than Sun -- and twice as large as Hewlett-Packard Co., whose recent revenue is 2½ times that of Sun. No longer. Sun's shares started their recent nosedive on Dec. 5, several days before other tech stocks started melting down this week, falling 45% in two weeks as rumors swirled and nervous analysts started downgrading the stock. Sun broke with longstanding policy to vehemently deny one particularly damaging rumor -- that it was preparing to disclose some sort of accounting irregularity -- but its shares continued to fall. Soon analysts were buzzing about potential delays in Sun's new lineup of servers, the fact that it was offering resellers and distributors rebates to help move product for the first time in recent memory, and, most seriously, the possibility that a broader economic slowdown will crimp capital spending on computers -- and Sun's earnings with it. Thursday, Sun shares fell 50 cents to $26.94 as of 4 p.m. on the Nasdaq Stock Market. Sun may well suffer from an economic slump, and in fact had already warned analysts in October that its growth rates were likely to slow next year regardless of economic conditions. It also faces a difficult challenge as it moves to a new line of servers based on a brand-new microprocessor; some analysts worry that demand for Sun's current product line could drop off in the first half of next year as it rolls out the new servers in stages. In addition, the company admits it has a rebate program in place but declines to give details, saying only that it has "reallocated" money normally provided as cash incentives to Sun partners through other programs. A Sun spokeswoman also declines to describe its current cost controls beyond saying that the company is being "fiscally responsible." As far as the new server line is concerned, however, Sun officials deny any delay and say they will complete its introduction by midyear as scheduled. And unlike a bevy of other high-tech companies such as Microsoft Corp., Sun hasn't issued any earnings warnings for the current quarter, in which it previously said it expects to see revenue growth in the "high 40s" and profit growth equal to or slightly less than that. Officials remain bullish for the coming year, given the economic climate. "There is lots of business out there, and we are well-positioned to get it," says John Shoemaker, the head of Sun's server division. Write to David P. Hamilton at david.hamilton@wsj.com