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

To: uu who wrote (5964)	12/4/1997 5:14:00 PM
From: Bald Eagle	Read Replies (1) \| Respond to of 64865

<<Perhaps not this year but certainly by 1999!>> Addi, we all know you want to retire soon, but if you're counting on SUNW hitting 150 by 1999, I'm afraid you'll be working longer than you want to.

To: uu who wrote (5964)	12/7/1997 1:40:00 AM
From: Byron Xiao	Respond to of 64865

why do you think it will hit 150 by 99? Let's see, projected earning for this year is 2.25/sh, for 98, it's 2.71/sh, that's about 21% earning growth. Based on Peter Lynch's formular, the PE should be about equal to the percentage earning growth, which would be 21. If SUNW meets the street estimate for this quarter, which is about 0.54/sh, then using the PE multiple of 21, the fair price for SUNW should be 47.25. And the S&P 500 companies PE is at exactly 21, which is at the highest historic mark ever. Considering the lowest unemployment number in 23 years and the low inflation rate, maybe this PE is justify. But this bull run has gone on for 7 years, how long do you think it's going to last? Asian market's crash will affect the hardware industry harder than other industry because a lot of the hardware manufacturers are from Asia. They will lower their price which will force US hardware company lower its price as well. As a result, profit margin would be down. Because of this, why should I pay SUNW a higher PE than an average S&P 500 company???? Nope, if SUNW meets its estimate, anything higher than 47.25 is over value for this stock and I will sell. If it misses it like last quarter, I will look for some bargain price at 25 for this one. And with the size of SUNW, why do you think it can achieve a 60% profit growth rate over the next couple years to warrant a $150 stock price???? You are dreaming Addi, but I hope your dream comes true. I just don't think it's realistic.