SUN Micro

Was wondering what others thought of SUN Micro. Its at about 6.60 a share right now. Short term I dont see it doing a whole lot but long term I think it is a buy at this price. Cant see this company going under or the stock going much lower. Was wondering what others thought.

What marketplaces do you see them entering?


I don't know too much about them, except that I worked there briefly, and they had some real freaky proprietary chipset designs for "workstations."


What the heck is a "workstation" in the year 2002? Isn't that something from NASA in, like, 1985?


I guess they have Java and some other OS licenses, but who cares who put the dot in dotcom?


Say, how is Silicon Graphics (SGI) doing lately?


I have a new rule about reserving judgement when I don't know what a company does. Instead of saying "I don't know jack," I have found it would have made more money if I said "they're not doing jack."


I guess Sun makes servers, but who doesn't? On the other hand, Sun is what I call a "topology" company, and that is a strike in their favor.


But none of this is really relevant anyway, since it is probably - and apparently - what everybody thinks. The real question, then, is what does everybody think?


Or, if you are just buying it because the current price is below X, where is an amount somebody paid last year or something, don't bother.


Final recommendation: BUY.


Mind you, a 21-billion-dollar market cap isn't exactly the brink of bankruptcy.


eLROY

I think the stock is undervalued. However, earnings visibility is rather dim right now. Analyst projects for fiscal 2003 year earnings range from $0.18 a share to $0.30 a share. New fiscal year for SUNW starts in June. This quarter should be in the black. Wall St. is hammering this stock (I know the COO just retired) because most of the influenchal money managers and brokerage houses would like to see SUNW cut costs (although margins are improving but apparently not fast enough for a lot of investors). CEO Scott McNealy is resistent to this idea as he feels it would be sacrificing the future of the company. The companies balance sheet is very "clean" as they have $6 billion in cash, investments, and cash equivalents. Also SUNW doesn't have significant accounting issues at least none that I know about. No significant long term debt according to the company although I haven't researched their balance sheet totally. SUNW sells at about 1.6 times revenues. I do think that the stock is vulnerable to a lot of rumors etc. because they haven't returned to profitibility. If you put a lot of faith in long term analyst estimates (I don't) with earnings of $.20 cents a share next year, their PE based on future earnings is 33 which is kind of high. Just remember these estimates are based on guidance from the company and can easily be revised up and down. SUNW does try and provide guidance to Wall St. on a regular basis.


I assume you are familiar with their product lines so I won't go into those. Hope this helps.

so what ? SUNW smells like a dead fish. I used to

live in the valley and did lots of contract work for these types. I also somewhat of a finance buff. I could be very wrong about it, and likely someone will buy them but they can go chapter 7 and .50 cents first, remember in this game the person who blinks last wins. Are you so sure in yourself? He, punk? (just kidding and practicing my Clint Eastwood imitation._)

eLROY was spouting about SUNW workstations and such. All I was pointing out was that the important product line for SUNW is servers. Of course SUNW isn't the only one in ther server business never intimated that they were.


.. so what ? ..


Just tried to provide some information.


.. SUNW smells like a dead fish. ..


Ok by me. I don't think my post touted SUNW. I did say that I thought it was undervalued but I also offered an opinion that based on projected future earnings the price could be construed by many as being high. I also mentioned that the earnings visibility for SUNW is dim. I hardly think I gave a glowing recommendation.


.. I used to

live in the valley and did lots of contract work for these types. I also somewhat of a finance buff. ..


How interesting and thanks for the useful information in deciding whether or not SUNW is a good stock purchase. Appreciate the help.


.. I could be very wrong about it, and likely someone will buy them but they can go chapter 7 and .50 cents first, ..


I'd lay a lot of money that you are wrong. A chapter 7 is impossible really (it's for individuals not corporations). Chapter 11 is always possible for any company but really it's impossible for SUNW at least in the forseeable future.


The fact that SUNW has significant cash and a "clean" balance sheet in my mind puts a floor on this stock (where that is who knows I know I sure don't). No doubt it could go a lot lower though.


.. remember in this game the person who blinks last wins. ..


Thanks for the advide I'll take it to the bank.


.. Are you so sure in yourself? ..


In regards to what? I'm sure about the information I provided. Unfortunately you have contrued my attempt at providing information as a recommendation to buy the stock. Perhaps I'm wrong but I did mention the problems with earnings visibility and the frustration with Wall St. over SUNW margins and how the company is operating. True, I offered a personal opinion that I think it's unvervalued (mainly because of the positive balance sheet, revenues are fairly strong and that SUNW has a strong product line which will translate to higher future earnings) but the problems that I described regarding the company I would think would temper anyone's enthusiasm for buying the stock.


.. He, punk? (just kidding and practicing my Clint Eastwood imitation._) ..


Why do you feel compelled to imitate Clint Eastwood? I spent more time than necessary responding to a post that I found to be silly but misreprenting what I had posted. I just wanted to set the record straight.

that made small fortunes from a much larger one.

Tom, no offence it all academic if we are just talking price. I just don't believe corporate books too much anymore. they have many ways to lie. Fact, I am no beancounter and don't know chapter 11 from chapter 7. I am a trader who makes

lots of money year in year out. This sucker(SUNW)

is going down (has been for sometime and there is a reason) - maybe there is a floor but I don't make money from making guesses and picking bottoms. I am sure you also have seen lots of companies selling under par if you know your finance. It happens all the time. So $6 bucks today can be 4 tomorrow.

.. I could be very wrong about it, and likely someone will buy them but they can go chapter 7 and .50 cents first, ..


I'd lay a lot of money that you are wrong. A chapter 7 is impossible really (it's for individuals not corporations). Chapter 11 is always possible for any company but really it's impossible for SUNW at least in the forseeable future.


The fact that SUNW has significant cash and a "clean" balance sheet in my mind puts a floor on this stock (where that is who knows I know I sure don't). No doubt it could go a lot lower though.


________________________________________________


You probably noticed in my last post that I did say it could go a lot lower. In no way did I intimate that SUNW has reached a bottom or that I know where the bottom is (I also stated that I had no idea how low it could go). If you have an opinion why not state it instead of misrepresenting what I wrote?

The size of the market cap and the fact it cant go bankrupt because MC is too high is pure lunacy (ENRON). All market cap means is Oustanding shares times price of the stock , it has very little to do with the actual value of a company . The company has net tangibles of 7 bill ,worth a little over 3 bucks per share in BV. (book value) . they use up 1 billion a quarter in general, and adminstrative charges -- nice kickback bonuses eh --- well if the co, can somehow cut on these expenses, the stock could double at the very least,, as they are,, its not worth 6 bucks

Stock will lack news for awhile so I guess the best thing to do is sit on it for some time and let it tread water. In the end it will go up because its cash and people talent will clean up against its so called server competition. IBM as competition, are you kidding? IBM is this company that's recent history is to get out of any business that isn't about service revenues. That means servers will be a discontinued line at some point. The other competition is in much worse shape than Sun, they will quietly bow out or take a niche market. Sun is in an unglamorous industry right now, but no doubt one that has a big place in the economy. Servers will only get bigger and as the others struggle Sun can just wait them out. This could take awhile, hence my suggestion just to wait. Long-term though this company has about 1% chance of being bankrupt anytime soon. They haven't made any kind of big expensive bets into other product lines, something that is very smart right now considering how little businesses are investing in tech.


Lastly, what does Enron have to do with this company or any other company? Enron is a case all itself, I think we all can see that. For all the hype about many companies and their accounting practices, no one has seen anything close to it and as time goes on people will realize their fears were seriously unfounded. Heck if Enron didn't lose their credit ratings and changed their practices they would still be a functioning business. The lesson they show is a leveraged business is a risky business. Sun is not a leveraged business by any means. They have hordes of cash driven by sales and are still generating cash to this day. Unless you think their business is suddenly going to go into negative cash flow, you are crazy to even think of valuing them at book value or value of cash on hand. Anyone that knows finance should know the fallacy in that argument.

i was just refferring, to the statement saying the MC was too big to be considered a bankruptcy risk. I also agree ORCL is not even close to that, and it wont happen, . as long as the cash flow , earnings and revenues keep declining , the closer it will trade into its BV. As it stands of course it will trade at multiples

correction----meant SUNW not orcl

Just don't forget, the Valley has been written off many times before. Sun has a lot of talented people and most importantly a great distribution channel with the servers. They might become a bit of a commodity in the future, but the talent there will figure out other ways to leverage what they have into something profitable. That is how the Valley works, it booms awhile and then gets fat and wallows...only to boom again when people start looking elsewhere for growth stories.

while I don't wish to "write off" the Valley..

I don't have that much faith in it. Slowly industry and bigger companies are all moving away. Now (VC's and public) are short off a few billion dollars to crooks. They bet the ranch on

the internet and lost. Maybe we should not rely on the internet too much, except for this type of

a forum. Example in point HPQ - Texas where CPQ

is based is not going to hurt as much as Mnt.View - they are laying off 15000 people.

Next is sunw if they want to survive !

"Sun has a lot of talented people and most importantly a great distribution channel with the servers. They might become a bit of a commodity in the future, but the talent there will figure out other ways to leverage what they have into something profitable. That is how the Valley works,"


This is approximately what I meant when I called them a "topology company" and called them a buy. In my opinion, Intel is the ultimate topology company, and I only wish the iAPx86 marketplace would evaporate, so that I could buy them at book before they take over the world again.


GE is a topology company. The basic idea is, that they have enough feelers out, that they can grow and adapt and respond to profitable opportuniites in the environment. They are wired in, and have sufficient internal complexity to reshape to reflect their surroundings. It's just OFT in business, and they've got the "F" (feedback).


eLROY

You just don't understand the Valley if you think that about it. Everyone in the Valley knows its a boom/bust cycle. Newcomers get a little thrown off and learn it the hard way but there are many people that have gone through numerous cycles and say they can feel it isn't far off from coming up again. That is the nature of the tech world. More money goes into the Valley than anywhere except New York. Money creates money. Texas might have issues, but that is part of the Houston culture as well. Places where money congregates draws talent and talent coupled with money is a great combination. Sun will be one of the beneficiaries of the comeback because it has an irreplaceable product (as of now) that allows it to stay in the game no matter where the developments come. Remember also that companies like Sun really can measure their worth just in their people and the patents and business channels they create. In that respect its hard to say Sun isn't going to be a player.