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

To: Charles Tutt who wrote (50495)	7/19/2002 5:35:30 PM
From: cfimx	Read Replies (1) \| Respond to of 64865

did emachines have BILLIONS in debt like suncom? that's NAIVE ct.

To: Charles Tutt who wrote (50495)	7/19/2002 11:01:03 PM
From: techtonicbull	Read Replies (1) \| Respond to of 64865

07/19 16:40 Sun Micro Falls on Lower Forecast for Profit, Sales (Update8) By Paul Horvitz Santa Clara, California, July 19 (Bloomberg) -- Sun Microsystems Inc. shares tumbled 27 percent, their biggest plunge since 1986, after the maker of computers that run networks and Web sites said fiscal 2003 profit and sales will lag analyst forecasts. The shares slid $1.55 to $4.25. That pared $5.03 billion from the company's market value, now $13.8 billion. The stake held by Chief Executive Scott McNealy, Sun's sixth-biggest investor, fell by $86.3 million. The shares have plunged 93 percent since reaching a record high of $64.66 on Sept. 1, 2000. ``Their big past customers -- the telecom companies -- aren't in existence anymore, and the others are cutting back,'' said Alan Loewenstein, co-manager of the John Hancock Technology Fund, which held 600,000 Sun shares as of March. Sun expects a ``slight'' loss in the first quarter ending in September and profit of as much as 15 cents in the year that began this month, Chief Financial Officer Steve McGowan said yesterday. Analysts had estimated a 1-cent profit in the quarter and 17 cents in the year, the averages in a Thomson First Call survey. Sales in 2003 may rise 10 percent to 15 percent, McGowan said. Analysts had predicted 17 percent. Telecommunications, Internet and financial-services companies, which analysts say made up more than half of Sun's 2000 sales, have curbed purchases of the company's server computers. Sun's reluctance to make deeper cost cuts as the slump lingers will hurt profit this year, investors said. `Troubled' Plan ``Sun's business model is troubled,'' Merrill Lynch & Co. analyst Steven Milunovich wrote to clients. Both gross profit per employee and gross profit per dollar spent on research and development have dropped by at least 40 percent in the past three years, Milunovich wrote. ``McNealy's unwillingness to attack headcount is part of the problem,'' he wrote. Milunovich has a ``neutral'' rating on the shares and doesn't own them. Co-founder McNealy owns 1.72 percent of Sun's shares outstanding, according to a May filing. Today's share-price drop reduced the value of his stake to $236.7 million. Six Sun executives at or above the level of senior vice president have quit since April. They include President and Chief Operating Officer Ed Zander, the company's second-in-command; Chief Financial Officer Mike Lehman; executive vice presidents John Shoemaker and Larry Hambly; and Senior Vice President Mel Friedman. Masood Jabbar, executive vice president of sales, quit yesterday. Sun's fiscal 2002 sales fell 32 percent to $12.5 billion, the first annual decline since the company became publicly traded. Spending on computers and software shows no signs of growth, McGowan said. Unix Concerns ``We have concerns about Sun's long-term positioning'' because of their focus on products running the Unix operating system, said Lehman Brothers analyst Dan Niles. Sun, whose customers in recent years have included Enron Corp. and General Electric Co., is facing increasing competition from companies making servers based on Intel Corp. chips and running the free Linux operating system or Microsoft Corp.'s Windows system. In a slower economy, more companies are turning to these lower-cost Intel-based servers, Niles said. ``This is causing margin pressure for Sun'' as it's forced to sell more lower-price servers, Niles said. He rates the shares ``market perform'' and doesn't own them. Analysts had expected Sun's gross profit margin to increase in the fiscal fourth quarter. It fell 1 percentage point to 41.1 percent. Sun is responding to rivals by improving chip design and shrinking the circuits inside to bolster performance, David Yen, who runs the company's processor group, said in June. The company spent a year overhauling its server line to add faster UltraSparc III chips. The successor UltraSparc IV will run at speeds about twice as fast as current Sun products. An UltraSparc V also is being developed. In May, the company released the Solaris 9 server operating system with improvements for tasks such as running commerce and services on Web sites.