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Non-Tech : EARNINGS REPORTING - surprises, misses & more -- Ignore unavailable to you. Want to Upgrade?

To: 2MAR$ who wrote (480)	1/21/2001 10:58:03 PM
From: 2MAR$	Read Replies (1) \| Respond to of 762

SUNW ($30) Shares Tumble on Lower Growth Outlook By Peter Henderson SAN FRANCISCO (Reuters) - Shares of Sun Microsystems (NasdaqNM:SUNW - news) took their biggest one-day slide in over a month on Friday after the firm cut its sales forecast for the current fiscal year, leaving brokers questioning its high valuation and growth potential. Shares of Sun closed down $4, or nearly 12 percent, to $30-7/8 Friday on Nasdaq, in a generally rising market for technology stocks. It was the worst one-day performance for the stock since Dec. 11, when Sun dropped almost 13 percent. A host of analysts followed Sun's lead by trimming revenue estimates for the year. Sanford Bernstein and SG Cowen also cut ratings to market performer/neutral from outperform/buy. Top questions on analysts' minds were Sun's valuation, its ability to capture an even bigger share of the market for computer servers where it is already a major force, and its ability as a large company to grow quickly in a slowing economy. ``The short-term doesn't look great and there appears to be no catalyst for upside appreciation; longer-term, some structural challenges exist, and the stock isn't compelling from a valuation basis,'' Bernstein analyst Toni Sacconaghi wrote in a note. Sun reported on Thursday that sales rose 44 percent in its second fiscal quarter to $5.12 billion, just missing the Wall Street consensus forecast. The company also lowered its full year sales growth forecast to 30-35 percent from the mid-30s. Sun is trading at a multiple of from 40 to more than 50 times estimated earnings for the current fiscal year, and some analysts argue that the premium will be hard to justify. Sun has no competitor that is as big and as focused, but International Business Machines Corp. (NYSE:IBM - news), which expects high single-digit revenue growth this year is trading at about 24 times 2000 earnings, compared to a richer multiple of 55 for Sun. Salomon Smith Barney analyst John Jones, one of the least optimistic about Sun's share outlook for the rest of the fiscal year, maintained a neutral rating and a $30 price target. ``Sun has the best fundamentals of any server company in the world today, the best growth rate and the best market position,'' he said. ``The issue at Sun is of valuation of a company with decelerating revenue growth.'' Backers focused on Sun's strong management and competitive drive. ``We view the revenue shortfall this quarter and the company's lowering FY01 guidance as macroeconomic demand issues and remain confident about the company's competitive position as a flagship vendor of the new technology infrastructure,'' Bear Stearns analyst Andy Neff wrote. He kept an attractive rating on Sun but dropped his forecast for full year earnings to 65 cents from 70 cents. Before Friday's weakness Sun had outperformed the American Stock Exchange computer hardware (^HWI - news) by nearly 35 percent since the beginning of 2000, dropping about 10 percent against about a 30 percent drop for the index. But the stock has been trending lower since late October and has struggled to break back above $35 since mid-December.