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

To: E_K_S who wrote (41908)	3/10/2001 6:14:42 AM
From: JDN	Read Replies (1) \| Respond to of 64865

Dear Eric and all: Wow, I just happened to look at the volume numbers after your post. Pretty big. I guess the institutions dont have the stomach to wait a few years for MAJOR PROFITS in SUNW. I can understand that, they have qtly bonuses to worry about (gg). Those that buy in at these levels IMHO surely will triple their money in 3 years if thats the assumed recovery period. Beats CD's if you can afford the illiquidity. JDN

To: E_K_S who wrote (41908)	3/10/2001 9:20:39 PM
From: E_K_S	Read Replies (3) \| Respond to of 64865

SUN MICRO PREPARES NEW PRODUCT LINE Sun Microsystems (SUNW, $17) announced this week that its new line of mid-level servers would be ready to commence shipments in two weeks. The new servers, based on the new UltraSPARC III chip, are Sun's answer to stiff competition from the likes of Hewlett-Packard (HWP, $30) and IBM (IBM, $99) in mid-range applications. Sun has traditionally dominated the high-end (i.e., more complex, higher margin segments), but has seen intense competition in other areas. COMMENT: At the very low-end of the server market are the PC manufacturers, such as Dell (DELL, $23) and Compaq (CPQ, $19). The servers referred to in today's announcement are targeted at a segment of the market characterized by medium-sized enterprises. This market segment contrasts with major corporations at the high-end, and small businesses at the low-end. Admittedly, Sun has encountered stiff competition from the aforementioned companies. The biggest problem at this point, however, is not Sun's technology or its products. The server market is simply in the midst of the same over-capacity situation that has battered other tech sectors. Sun has the best products, and has new product introductions slated throughout the year. Sun's resellers are simply holding too much inventory, and corporate customers have slowed purchases in response to an economic slowdown. As a result, management has given tepid guidance to the Street to reflect limited near-term visibility. Downward revisions from Street analysts ensued, and Sun's stock price joined the downward spiral. Though earnings estimates may be close to finding a bottom, downward revisions over the near-term are possible. At current levels (roughly 70% off the 52-week high), the stock has been unfairly punished. Sure, growth has slowed, but so has the industry and so have its competitors. Our thesis has not changed -- Sun still has a very strong competitive position in a high-growth market. The market is in a cyclical downturn, but growth will reaccelerate at some point, and Sun's valuation will follow. We don't know when this will happen, but we would not dump Sun's stock now. One additional note: Investors will be paying close attention to progress on the new UltraSPARC III chip in coming months. Rumor has it that Sun is having difficulty gaining sufficient yields in light of depressed production volumes. This "yield" is a measure of efficiency, and could greatly impact the company's first-quarter gross margin. We will provide further updates on this as more information becomes available. ================================== EKS