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

To: cfimx who wrote (50062)	6/27/2002 10:48:18 AM
From: Elroy	Read Replies (1) \| Respond to of 64865

So having said that, I believe SUNW in 2002 will at best have a market cap of about $12-$17 billion (or about 1.5-2 times its sales - or $3.5-$5/shr). Your numbers are too low. Sun at $5 is at about 1.3x sales. Also, 1.5-2x sales is probably too low unless you expect Sun's gross margins to decline pretty significantly. Sun is a pure play with mid-40% gross margins, better than IBM, EMC, HPQ, LXK, or DELL. Except for HPQ which is in the worst position of the lot, those companies all get better than 1.5x sales, so with Sun having higher gross margins they should get a higher multiple (every dollar of sales has more potential to fall to the bottom line, so higher multiple). The hardware companies with the best operating models (CSCO and NTAP, both 60%+ gross margins) get between 4x and 6x sales - so it isn't much of a stretch to see Sun at 3x sales. EMC is currently at 2.5x sales with further to go to profitability, similar competitive problems (here comes IBM) and lower gross margins than Sun). All Sun needs to get a big multiple expansion is a bit of demand (i.e., increased revenues). If revenues pick up you'll see Sun's multiple rise much faster than the other hardware stocks described above because the higher gross margins translate to faster profit growth. That's my opinion. Now......when is demand going to pick up?! Elroy

To: cfimx who wrote (50062)	6/27/2002 11:27:21 AM
From: uu	Read Replies (2) \| Respond to of 64865

room22: > you come here without the baggage of much of your former arrogance, and for that I am happy for you. i'm sure in the next bull market, you will approach the "next" twister in a more personable and respectful way. all the best. Believe me (and I wished I knew how to stress this), but the last person you find on this planet who can be characterized as arrogant, it would be me! As for my treatment of twister, I always thought our discussions were civil. He was awfully wrong at the time. It does not matter whether he proved to be wrong or not NOW, the point is if he had acted on his convictions back then (1997) he would have been wiped out by March 2000 for the dramatic upward movement in the stock price of SUNW. My point is one can always argue that one day there will be a big earthquake in California and therefore one should avoid living in California on investing in its real estate market. Sure, someday that may happen, but in the meantime that does not mean to avoid California and not to enjoy the life there and instead go and live in (lets say) some far out village in North Dakota! In anyway, as for SUNW, as I expressed the stock will move up eventually but not to the extend of what it did from 1997-2000 due to server centric computing model maturing. The driving force this time around would be the Web services. Best Regards,