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

To: Mephisto who wrote (15465)	4/16/1999 6:13:00 AM
From: puborectalis	Read Replies (1) \| Respond to of 64865

Sun Microsystems Reports Record Revenues and Earnings for 3rd Quarter By LAWRENCE M. FISHER AN FRANCISCO -- Sun Microsystems Inc. reported Thursday record revenues and earnings for its fiscal third quarter, as the maker of workstations and servers continued to gain market share. While Sun's earnings were just a penny above the consensus estimate, revenues were substantially higher than analysts' expectations. Shares of Sun, which reported its results after the market's close, ended the day at $60.4375, down $2.125 in Nasdaq trading, amid a day of turmoil for technology stocks. Sun's strong results, coming just a day after Apple Computer Inc. beat estimates for the sixth consecutive quarter, indicate a shift in the market. Sun and Apple have long been considered vulnerable because they do not adhere to the standards set by the Microsoft Corp.'s Windows operating system and the Intel Corp.'s Pentium microprocessors. But it now appears that both companies are finding ways to differentiate their products and generate above-average revenue growth and profit margins while "Wintel" stalwarts like the Compaq Computer Corp. sputter. "Whereas a year ago, both the investor and the end user opinion was that being out of the mainstream was a bad thing, now being out of the mainstream is a good thing," said Laura Conigliaro, an analyst with Goldman Sachs. "One way it's a good thing is that it provides clarity of focus. Another is value-added." For the quarter ended March 31, Sun reported earnings of $261.2 million, or 63 cents per diluted share, up 13 percent compared with $232.0 million, or 59 cents a share, in the comparable period a year ago. Revenues rose 24 percent to $2.94 billion from $2.36 billion in the third quarter of fiscal 1998. Earnings for the quarter include a charge of $28.7 million in connection with the acquisition of the Maxstrat Corp.. Due to the structure of this transaction, Sun also incurred an increase of $10.9 million to its income tax provision. Without these one-time items, Sun earned $291.4 million, or 71 cents a share. Per-share figures do not reflect Sun's recent two-for-one stock split which was paid on April 8. Analysts expected Sun to earn 70 cents a share, according to First Call. "We experienced particularly strong demand for workgroup servers, high-end servers, storage and services," Michael E. Lehman, Sun's vice president of corporate resources and chief financial officer, said in a telephone interview.

To: Mephisto who wrote (15465)	4/16/1999 12:31:00 PM
From: Alok Sinha	Read Replies (2) \| Respond to of 64865

Well, I was wrong about the market reaction to SUN's earnings. I guess everybody was looking for an excuse to sell after recent run-ups, and Lehman's cautionary outlook gave them more than sufficient cause (obviously Microsoft's cautious outlook every quarter is treated differently). I suspect he was trrying to dissuade the Street from raising estimates after such a strong quarter. When the dust settles, I think SUNW will do fine. As the MSDW analyst noted nothing has changed as far as the business is concerned, and based on his advice I bought back another 1000 shares this AM at 56 (in addition to the 200 I bought yesterday). Next buy is below 50 (if that occurs). I guess we have to remember that SUN even after the drop from 145 (pre-split) it is still at 110 (which a couple of months ago I would have considered lofty). The split kind of takes away that perspective. There also appears to be a shift out of large cap tech /financials name into the cyclicals and small cap - but I don't think that is going to last very long. Single digit EPS growth is the best this sector can achieve - but it is a healthy rotation. Regards Alok