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

To: Sonki who wrote (41510)	2/22/2001 4:54:11 PM
From: t2	Respond to of 64865

stock buyback is the positive I like. might start a new trend.

To: Sonki who wrote (41510)	2/22/2001 5:24:28 PM
From: David Howe	Respond to of 64865

<< EPS will be $0.07-0.09 vs current consensus of $0.15 as US recession is impacting IT spending >> Earnings might be 1/2 of what was expected. Unfortunately that's what happens when a company relies heavily on hardware sales. Margins decrease significantly with a slight decrease in sales (or expected sales). Companies that have 82% gross margins in software sales don't usually suffer like this from a sales slump. Software rarely becomes an inventory problem since it isn't much more than 1s and 0s. R&D, marketing and sales costs can be cut in order to maintain net margins. On the other hand, a hardware company ends up stuck with a lot of costly inventory and since they are a lower margin business to begin with it ends up hurting the bottom line much more significantly. IMO, Dave Dave