Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: alydar who wrote (50002)	6/26/2002 7:21:51 PM
From: E_K_S	Read Replies (1) \| Respond to of 64865

Hi Blisenko - - My initial investment in SUNW was in 1998 before the stock splits. At that time SUNW had consistent growth in both earnings and revenues and was priced at about 19 PE. Split adjusted SUNW is priced about at the same price (or a bit lower) from my original buy. The only difference is that SUNW sales are about 2x higher while net earnings are zero. They have booked significant cash like you posted and have consistently made R&D investments in future technology. If I was to compare SUNW's market position now vs. 1998, I would say they are better positioned now (both in product offerings and their balance sheet) but competition is fierce and hardware "industry" margins are shrinking. SUNW's future growth and increased marginal profits will be obtained from their Sun One division (i.e. software products). Service revenues will also grow but overall hardware margins will probably shrink but absolute hardware revenues will increase. This is a cyclical business (following the IT business cycle) and SUNW had an excellent five year run. As new technology emerges, I see the next huge development in the back office connecting many enterprises together through web services. SUNW is in an excellent position to deliver many of these back office solutions through their new integrated hardware using their latest version of SOLARIS 9.0 and Sun One software. The key item to watch as SUNW makes this transition is how their revenue mix from hardware sales to software and services moves forward. Eventually, SUNW will maintain a larger percentage of their sales from service contracts and software license fees. This will help stabilize their revenue flows from quarter to quarter. I think they may need to hook up with other software vendors (like Oracle) to develop a revenue sharing program that provides an easy end user deployment of multi vendor software that makes this back end office with web services work seamlessly. Sunw is also well positioned worldwide so as many mulitnational companies deploy these web services, SUNW will be right there to support their customers. EKS