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

To: Steve Lee who wrote (40583)	1/19/2001 2:56:55 AM
From: craig crawford	Read Replies (1) \| Respond to of 64865

>> I never said they missed relative to expectations. Just corrected your ridiculous assertion that the growth rate is 30 - 35% << The 30-35% is the growth rate going forward that management spoke about in the CC. Straight from the horses mouth! I'm not doing some sort of calculation to come up with the 30-35% number. Capische? >> You really want to argue numbers with me? << No, arguing with you irritates me. You seem to have trouble articulating your point of view. >> I do however think that a company growing at 20% (or even 30% if u prefer to take a blinkered approach) does not deserve a PE of 70. << You obviously have some sort of ax to grind. Where do you come up with ridiculous numbers like a PE of 70??? SUNW doesn't have a PE of 70 on trailing or forward numbers. You either have a problem doing simple math calculations or you have a short position that's got you antsy. Also, you can't use a forward looking growth rate of 20% (or 30%) and then compare it to a trailing PE. If you want to go around quoting numbers like "PE of 70" which is false to begin with, you need to look at the EPS growth of around 60%. If you want to talk numbers going forward, SUNW is guiding in the 30-35% range. Well on next years numbers SUNW's PE is around 39 assuming some analyst doesn't go on a number cutting spree tomorrow morning. That is a quite reasonable PEG of 1.3 or so. MSFT is trading at 29 times next years earnings (59 % 2.02) and it is struggling with single digit revenue and earnings growth. Maybe with the Fed boosting the economy MSFT might be able to grow 15-20% on the bottom line. Estimates on INTC are saying that it won't grow earnings at all next year yet it's trading at a PE of around 22. This after warning about a 15% decline next quarter. DELL is trading at around 23 times next years earnings estimates. HWP is trading around 20 times earnings. CPQ is trading at 18-20 times earnings (some of these companies have different fiscal years so it's not easy to compare their PE's to each other going forward. Some fiscal years look out an extra 6 months or so). Every single one of those companies has warned and has had to have their estimates slashed. They have disappointed regularly as of late and their numbers are in jeopardy. I don't expect any of them to grow faster than 15-20%, and that's assuming everything goes well. Probably more like 10-15% Now, look at SUNW. They have proven time and time again that they simply execute. Somehow some way they make the numbers even though expectations are high. Their guidance is spot on and analysts can trust them. If they grow 30-35% like they have forecast that will be 2 1/2 - 3 times the growth at some of those companies I listed above. Their PE should reflect that. If you have struggling companies like MSFT/INTC/HWP etc which get PE's in the 20's with 10-15% growth at best, then SUNW with growth of 30-35% deserves a PE in the 50 range. Furthermore the market over the last couple of weeks has been saying that Greenspan is on the case and growth is going to pick up again in the second half. I think SUNW was talking fairly conservative for their forecasts going forward, so there is a possible upside to those numbers. Also, when the Fed goes on an aggressive easing course PE multiples expand. >> said this stock was overvalued when it was nearly double todays price, << So what. Did anyone think it was cheap at 65? >> and still maintain that view. << That's fine. If SUNW is overvalued then pretty much all tech stocks are overvalued. That assertion is not a surprise to anyone, so it's old news. >> However, there are enough foolish investors with rose coloured spectacles in this stock so I think earnings will now catch up with the price while the stock bases, << Are you bearish on all technology stocks such as CSCO, EMC, ORCL, INTC, MSFT, etc? I can understand the bears perspective if you want to make a case that the whole market is overvalued. I have major disagreements with you if you claim that SUNW is overvalued but everything else is cheap. Is GE cheap? How about KO? How about the drug stocks? Would you like to pay 30-40 times earnings for those single-digit or 10-15% growers?