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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: The Freep who wrote (77551)	5/29/2001 6:39:55 PM
From: StormRider	Respond to of 99985

Sun Microsystems (SUNW) 18.67 -1.80: The market just got its first taste of what a major June quarter earnings warning can look like. In its mid-quarter conference call, technology bellwether Sun Microsystems announced it now expects fourth quarter revenue to come in between $3.8 billion and $4.0 billion. Relative to current consensus estimates of $4.36 billion, the revised guidance constitutes a topline shortfall of between 8.3% and 12.8%. Not surprisingly, the bottom line doesn't look any better. SUNW now expects pro forma fourth quarter earnings between $0.02 EPS and $0.04 EPS. On a GAAP basis, these results should be just slightly better than break even for the quarter. Earlier today, Goldman Sachs analyst Laura Conigliaro cut her full year 2002 estimates for SUNW citing three primary factors: 1) weak demand in the U.S. that's beginning to spread abroad, 2) a transition in the company's product cycle, and 3) a tougher pricing environment. Admittedly, the cut to estimates was very well timed, but according to SUNW only one of the former factors is responsible for its Q4 warning. "The news is Europe" stated SUNW management on the conference call. "Demand in Europe tailed off more than we thought it would." On the issue of product cycle, management repeatedly dismissed the notion its transition to UltraSparc-3 was contributing to weaker than anticipated performance. Instead, SUNW placed the blame on a broadly weak macroeconomic environment that was "stabilizing in the U.S." but again weaker than expected in Europe. SUNW also declined to identify pricing pressures as a problem. Fourth quarter gross margins are expected to be roughly in line with margins for Q2 and Q3. In the regular session, SUNW traded off 8.8% on higher than average daily volume. Since the conference call, SUNW has dropped another 6% in late trading. -- Michael Ashbaugh, Briefing.com

To: The Freep who wrote (77551)	5/29/2001 8:48:20 PM
From: SecularBull	Read Replies (1) \| Respond to of 99985

I think if we've learned anything during the past year, it is that analyst reports are generally not worth the paper on which they're printed. ~SB~

To: The Freep who wrote (77551)	5/29/2001 9:47:34 PM
From: t2	Read Replies (1) \| Respond to of 99985

So you're saying everyone expected this Sun warning, even though consensus estimates don't reflect that at all? OK. What about this fellow? From this morning. . . The Goldman Sachs analyst was pretty clear before the earnings. I tend to believe the bearish analysts just before the company provides an update or earnings release. Merrill has been pretty bearish on techs but I don't understand why they seemed to turning positive on SUNW. For SUNW to have flat sequential revenues from April to June quarter would have been amazing. Now this revised 10% decline makes more sense. These guys are under big competitive pressures from all sides, IBM, HWP, CPQ..and now Microsoft/Intel. For SUNW to grow without the support of those big spenders (dot.coms) is a tough task. It used to be "buy the best" but now it is buy what is practical/economical...and that is a tough environment for Sunw to compete. Here is a story on the WINTEL threat at the wrong time for SUNW. thestreet.com l Hey, NV -- since you expect all these warnings and such, why don't you post a list of the top ten stocks in the NDX and tell us what they're gonna earn? Do it now before anyone else warns. Do a good job, and that'll silence a lot of your critics. Not a bad idea.<g> I just want to determine who will be warning. The very obvious candidate for next big one would be Oracle....and my hunch is that the market is expecting this one. The question will be how bad is it. That seems like the near term plan...to set up a warnings list. The reaction to SUNW's warning is going to interesting as it will tell us what the market expected. . Already have a few good candidates for profit warnings. The problem will still be to determine whether this market would be suprised by a warning. I guess, to me and you both, though, the question is what impact these warnings and missed numbers will actually have on the market. Will they get ignored as they did in April? Do we sail on by until (if) Q3 and Q4 numbers get revised? It just seems to me that such reduced earnings now have to cap the naz upside later -- unless PEs reach those stratospheric levels again. One thing to note would be that not all companies are doing as poorly as SUNW. In addition, most of the turnaround stories have already forecasted declining revenues quarter to quarter. I would be willing to bet that the bar was set sufficiently low enough to hit targets in most cases of big name tech stocks. To me the bottom line is that the market seems to sell off as the market enters profit warning season. IMHO, it really has nothing to do with the doubts of a second half recovery at this point. The Nasdaq is going to bounce back as investors realize that there are not going to be too many big warnings this quarter...because like I stated above, companies just set the bar so low and will push the late year recovery story on investors.