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

To: Charles Tutt who wrote (48926)	5/10/2002 2:18:09 PM
From: Charles Tutt	Read Replies (3) \| Respond to of 64865

(More talking to myself ...) I think we've pretty much disproved the old adage that the market anticipates the economy by six months. Now it seems to trail, waiting for a clear sign of recovery. Either that, or it really is anticipating what's to come, and we'll all be in soup lines by the end of the year. JMHO. Charles Tutt (SM)

To: Charles Tutt who wrote (48926)	5/11/2002 4:16:51 PM
From: techtonicbull	Read Replies (1) \| Respond to of 64865

One investor bottom-fishing in the technology area is Ross Margolies, head of the Salomon Brothers Capital fund. He's been attracted to Sun Microsystems, which at six bucks and change, is down 90% from its 2000 peak of 64 and off 50% this year. "Sun's a great recovery play on technology," he says. Sun is expected to operate at around breakeven in this year and earn about 25 cents in calendar 2003 (the company is on a June fiscal year) and 35-50 cents in 2004. Sun clearly faces challenges in the server market and has seen the worrisome departure of several key executives. But Margolies argues that Sun is likely to be profitable in 2003, has over $1 a share in cash and investments on its balance sheet, and has a market value of $20 billion, which is less than two times the company's annual sales. In the past, it often has paid to buy tech hardware companies when they sell for between one and two times sales. Hewlett-Packard, which just completed its merger with Compaq Computer, trades at around 19. That's 16 times projected profits for its coming fiscal year, ending in October 2003. H-P's market value of $58 billion is below its annual sales of $75 billion. The bull case for H-P made by analysts like Toni Sacconaghi of Sanford Bernstein is that the combined company is worth 21-29 a share, has downside support at 15 from the value of H-P's printer business and is capable of earning $1.20 a share in the coming fiscal year. While many big tech companies have little or no profits, they tend to have good balance sheets with ample cash and little debt. This puts them in better shape than debt-laden telecom companies.