Posts for Ticker ‘SUNW’

Short Sales in Reverse Stock Splits (JAVA, CMGI, SUNW)

Since Sun Microsystems (NASDAQ:JAVA) and CMGI (NASDAQ:CMGI) have recently completed reverse stock splits, we wanted to see what short sellers had done in the stock.  Short sellers often pile on more pressure with added short sales betting against stocks who perform reverse stock splits.

The following data is based on the Trade Date of November 27 and the Settlement Date of November 30:

Sun Microsystems (NASDAQ:JAVA) had an adjusted 11.101 Million shares listed in its short interest after accounting for its reverse stock split.  What is interesting is that from mid-November that is a drop of some 30.5% in the short interest.  Maybe there is some love after all.

CMGI, Inc. (NASDAQ:CMGI) had an adjusted amount of 3.585 Million shares listed in its short interest after accounting for its recent reverse stock split.  This represents only a gain of 2.29% in the short interest from mid-November on an adjusted basis.

Sun Microsystems used to trade under the "SUNW" stock ticker, and even had the "JAVAD" ticker briefly, and CMGI traded briefly under the "CMGID" stock ticker while that was a pending reverse split.

Jon C. Ogg
December 12, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: December 12, 2007 – 9:11 am in Short Interest, Technology Companies, , ,

Virtual Iron CEO Calls VMware Dominance Bad For All In I.T. (VMW, EMC, CTXS, SAP, GS, MSFT, DELL, HPQ, IBM, INTC, AMD, SYMC, SUNW)… 24/7 Wall St. Exclusive

The CEO of Virtual Iron, Ed Walsh, spoke exclusively to 24/7 Wall St. partners in two separate interviews.  Virtual Iron is the virtualization company owned in part and backed by Goldman Sachs (NYSE:GS), Intel (NASDAQ:INTC), and SAP (NYSE:SAP). It would seem to have little reason to speak well of VMWare (NYSE:VMW), since the much larger company is its rival and competition.  But, Walsh makes the point that his company is the only real obstacle to VMWare moving into an entirely dominant position in the server software business. This could hurt other tech companies in the pocket book. Walsh came to Virtual Iron out of EMC Corp.’s (NYSE:EMC) Information Management Software Group after being CEO of Avamar Technologies, Inc. which was acquired by EMC in 2006.

Microsoft (NASDAQ:MSFT) has a virtualization product of its own called Veridian, coming out later in 2008. But Ed Walsh notes that the product is at least a year behind VMWare and is aimed at lower level functions in server operations—server consolidation and provisioning which cuts operations costs. These are functions useful to smaller business but are less likely to fit the bill for large enterprises.

So, who plays where the real money is, and where the revenue per customer is highest?  Walsh contends that only Virtual Iron and VMWare have products that can handle complete disaster recovery, server capacity management, and the movement of tasks from application to application in a server cluster. He readily admits that VMWare is the Cadillac of the business. But, he claims that his software is easier to install and manage. 24/7 Wall St. asked if Citrix Systems’ (NASDAQ:CTXS) XenSource acquisition is coming on strong in the space and Walsh noted, “We never come up against XenSource. Just VMware.”  This was something similarly questioned by 24/7 Wall St.

When 24/7 Wall St. asked Walsh about what we have referred to over and over as “The VMware Conundrum” regarding valuation, we were surprised about the potential metrics Walsh was willing to discuss.  Walsh referred to the virtualization market on its own and gave some lofty multi-billion figures from IDC and even loftier figures from Bear Stearns What he added was all of the overlaps and secondary and tertiary operations that virtualization leads into that have been under the control of traditional I.T, software, security, and hardware firms.  The potential increase in the value of VMWare, if it can take over OS and security functions, could be substantial.

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Posted on: November 12, 2007 – 6:55 am in Software, Technology Companies, , , , , , , , , , , , ,

Sun (JAVA) Trades Up Sharply Ahead Of Earnings

Shares in Sun Micro (JAVA) are up as much as 2.5% ahead of earnings. The stock has been down over the last month while most big tech shares have risen.

Expectations for Sun earnings are very modest. But, with the stock well below its 52-week bottom, traders are clearly concerned that the company could miss.

Wall St. is looking for a 2.5% increase in revenue to $3.27 billion. Forecasts are that EPS will be $.03, up from a ($01) loss last year.

It’s not asking for much.

Douglas A. McIntyre

Get a Free Trial Subscription to "Ten Stocks Under $10" and follow 24/7 Wall St.’s views of the prospect for companies like Sun, Sirius, Qwest, Ford, and thousands of other low-priced stocks. Published 52 times a year.

Posted on: November 5, 2007 – 3:00 pm in Earnings,

Sun: Growth Plans In China, Like Everyone Else

Sun Microsystems (JAVA) thinks China will be the hot country in Asia over the next few years. Like almost every other US company, it believes it can double sales in the huge nation. With Sun, its timetable is three years.

Sun plans to use partnerships with local resellers to do the trick. The Wall Street Journal writes "the joint ventures will allow distributors to sell servers under the Sun name and enable Sun to expand quickly while keeping costs down." The Asia-Pacific region is now over 15% of Sun’s revenue.

Sun has had little success in improving its revenue recently. Growth in the last quarter was in the low single digits. Asia may not be able to help that as much as the company hopes.

Sun’s plans will probably run up against similar aspirations from Hewlett-Packard (HPQ), Dell (DELL), IBM (IBM) and local hardware companies in Asia. Sun’s plan to rely on resellers instead of a direct sales force may save money. But, it also takes direct management of marketing and pricing out of the firm’s hands. Which is probably not the best way to approach a foreign market, especially one where IP rights are not at the top of the list of business practices.

Sun’s China plan sounds nice. But "sounds" is as far as it will get.

Douglas A. McIntyre

Posted on: September 19, 2007 – 4:51 am in Technology Companies, , , ,

Everyone Wants To Be Microsoft

After the EU took Microsoft (INTC) out back and beat it up over anti-trust charges and then a European court upheld the EU ruling and fines, it would seem no one would want to be in Redmond’s shoes. The press is now full of articles about how Intel (INTC), Apple (AAPL), and Qualcomm (QCOM) might be the next Microsoft. Europe may look at their chips and iPods as tools of the monopolist.

Microsoft has become something of a corporate pariah.

That is unless one turns to the desktop. Eveyone still want to be Microsoft there. Google (GOOG) has started its Apps product, which has document, spreadsheet, and Powerpoint features. It hopes to take business from Microsoft Office which sold 71 million copies in the company’s last fiscal year.

Now, IBM (IBM) wants to be Microsoft. According to The Wall Street Journal "IBM plans to post on the Internet a package of its own software with applications that square off against components of Microsoft’s ubiquitous Office suite — a word processor to rival Word, a spreadsheet to go up against Excel and business-presentation software as an alternative to PowerPoint."

The new IBM product is based on Open Office, which is what Google and Sun (SUNW) are already using for their desktop suites. Big Blue wants to offer the free stuff to promote its own Notes product which provides email and instant messaging. Microsoft pretty much put Notes out of business over a decade ago.

Office has been challenged before,band with software that was close to free, if not just simply free. Linux desktop software has been available for some time. But, the interest in applications like Lindows began to fall off a few years ago. The product may have cost little, but it was hard to use and did not work well with Windows, which most PCs already have. There is usually talk about using a Linux desktop for low cost computers for under-developed countries. It never seems to materialize.

But, there is a reason that the Chinese pirate Windows in huge numbers. They could have Linux for free and not face prosecution (and, in China, execution). Windows has more features, more functions, and it only costs a little over $100.

Everyone wants to be Microsoft because they would like to sell hundreds of millions of something that companies and people will pay $100 for.

But, for better or worse, you don’t just get to be Microsoft overnight.

Douglas A. McIntyre

Posted on: September 18, 2007 – 5:44 am in Software, , , ,

What To Expect Ahead of VMware’s VMWORLD Conference

Even if VMware (NYSE:VMW) sees its stock go sideways or even if it gets soft from here, it has a long way to go before many would be able to say this was not a successful IPO.  The valuations are now just too high for the sector to longer have a focus in I.T.  This is also true regardless of the VMware stock conundrum we noted recently. If you haven’t read up on and learned much about virtualization, as an investor you should read up on it as the next ‘next thing’ in software and IT. If you look at the competitors that some existing partners (and owners) are invested in, you’ll really understand.

One week from today, and possible over the coming weekend, we should start seeing many more companies announce "Partnering with VMware" or "Supplying VMware" or "Strikes key partners for virtualization" and the like.  Next week from September 11 to September 13 is the VMWORLD 2007 Conference at the Moscone Center in San Francisco, and the roster is a Who’s Who in Techland.  There is also a Technology Day symposium ahead of it. 

Keynote speakers here will be from such tech heavyweights as John Chambers of Cisco Systems (CSCO), Patrick Gelsinger of Intel Corp. (INTC), and Hector Ruiz of Advanced Micro (AMD).  Other sponsors are major tech giants like Dell (DELL), H-P (HPQ), NEC, IBM (IBM), and of course the parent EMC (EMC).

Network Appliances (NTAP) is also a sponsor, and it already issued its press release to signal its involvement.

Some of the gold sponsors that are not quite as prominent are BEA Systems (BEAS), Brocade (BRCD), EDS (EDS), Emulex (ELX), Sun Microsystems (JAVA).  Further down the list of sponsors and exhibitors are BMC Software (BMC), Avocent (AVCT), CA (CA), Citrix Systems (CTXS) (which also recently made a virtualization buyout of XenSource), Novell (NOVL), Patni Computer Systems Ltd. (PTI), QLogic (QLGC), Microsoft (MSFT), Symantec (SYMC), and more.

What is interesting is that this virtualization conference includes almost all of VMware’s key competitors.  So they are not blocking out competitors, at least not this year.  For whatever it is worth, there are many overlaps out there in what would be deemed partners and competitors.  It has XenSource, Microsoft, Symantec, and others. 

It also sold out of sponsor and exhibitor opportunities some time ago.  Here is a full list of exhibitors.  It is probably safe to assume that many more virtualization partnerships will be coming ahead of, out of, and after this key industry event.

Stock Tickers: VMW, EMC, CSCO, INTC, AMD, DELL, HPQ, NTAP, IBM, BEAS, BRCD, EDS, ELX, JAVA, SUNW, BMC, AVCT, PTI, CA, CTXS, NOVL, QLGC, MSFT, SYMC

Jon C. Ogg
September 4, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the 24/7 Wall St. Special Situation Investing Newsletter and he does not own securities in the companies he covers.

Posted on: September 4, 2007 – 12:24 pm in Software, , , , , , , , , , , , , , , , , , , , , , , ,

Nasdaq Short Interest August 2007

Below is the short interest for major company stocks traded on the Nasdaq. The figures are from August 15 and compare to numbers from July 13, 2007.

Investors were not willing to bet on a consolidation among discount brokers with the short interest in Schwab and E*Trade rising. It appears they did believe that Whole Foods would complete its merger with Wild Oats, lowering short interest in WFMI.

Short interest in cable companies, especially Comcast and Charter fell, perhaps indicating a bottom for those stocks.

And, shorts moved out of Yahoo! indicating that many investors do not see its shares falling further.

Largest Short Positions

Level 3 (LVLT)                                    129.3 million shares short

Comcast (CMCSA)                             113.2 million shares

Microsoft (MSFT)                                 97.2 million shares

Charter (CHTR)                                    94.5 million shares

Sirius (SIRI)                                         91.0 million shares

Intel (INTC)                                          84.0 million shares

Yahoo! (YHOO)                                   62.3 million shares

Cisco (CSCO)                                     57.5 million shares

Applied Materials (AMAT)                    50.3 million shares

Oracle (ORCL)                                    46.3 million shares

Conexant (CNXT)                                 45.5 million shares

Symantec (SYMC)                              42.9 million shares

Sun Microsystems (SUNW)                 41.0 million shares

Largest Increase In Short Position

Expedia (EXPE)                                  9.2 million share increase

E*Trade (ETFC)                                  7.7 million share increase

ON Semi (ONNN)                              6.8 million share increase

Ebay (EBAY)                                     5.5 million share increase

NetFlix (NFLX)                                   4.9 million share increase

Oracle (ORCL)                                   4.7 million share incrase

Schwab (SCHW)                                3.4 million share increase

Tivo (TIVO)                                         3.1 million share increase

Largest Decreases In Short Interest

Whole Foods Market (WFMI)               9.3 million shares decrease

Charter                                              9.2 million share decrease

Opsware (OPSW)                               8.9 million share decrease

Yahoo!                                               8.5 million share decrease

Dell (DELL)                                        8.4 million share decrease

Applied Materials                                8.2 million share decrease

Crocs (CROX)                                     8.0 million share decrease

Comcast                                            6.6 million share decrease

Data from NASD and WSJ

Douglas A. McIntyre

    

Posted on: August 26, 2007 – 1:38 pm in HI/LOW, , , , , , , , , , , , , , , , , , , , , , ,

Sun Microsystems Trying The Ticker Change Trick (SUNW, JAVA)

Sun Microsystems (NASDAQ:SUNW) is willing to try just about anything to get its shares moving or at least thought of differently.  The company is CHANGING ITS STOCK SYMBOL….to "JAVA."  Yep, the lame stock ticker change. 

It will assume the stock ticker "JAVA" on NASDAQ on Monday, August 27, 2007.  The company notes how it is mostly tied to the Java brand and platform.  But here is the problem: it costs next to nothing to license Java anymore.  Its main revenues come from actual product sales that it claims run teh Java deployments, but those servers and storage systems run everything else too.

Maybe they will try a reverse stock split next, or maybe keep issuing the statement "We are well positioned for the years ahead."  After that, they could see if the other listed company with the ticker "FREE" would sell them the ticker.  This is a yawn of an event at best.

Jon C. Ogg
August 23, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: August 23, 2007 – 12:20 pm in Shareholder Issues, Technology Companies, , ,

Microsoft And Cisco: Friends Forever

Microsoft (MSFT) and Cisco (CSCO) want to make it clear that, although they compete, they are friends. According to Reuters, even though the two companies both make "unified communications" systems that tie together e-mail, phones and other tools over Internet networks, the systems from the two companies will inter-operate. Customers should not worry that incompatible features will ruin their IT efforts.

MSFT has had these press conferences before. There was one with AAPL a number of years ago when Redmond put money into the Mac company and said it would build Windows versions for the AAPL machine. The has been one with Sun Microsystems (SUNW) to bury an old hatchet between the two firms. And, one with Novell (NOVL) to announced a venture that would market Linux and Windows together as products that can both be used together efficiently on PCs and servers.

The MSFT press conferences usually do not amount to much. Reuters writes that "CSCO CEO John Chambers said he and MSFT CEO Steve Ballmer would visit customers together late yesterday, and that the they would try to clarify how the two companies compete and work together at the same time."

The word "try" is important in that report. "Try" is all either company will get. They are mortal enemies competing for billions of dollars being spent by the same customers. All they want to do is cut each other’s throats.

Douglas A. McIntyre

Posted on: August 21, 2007 – 4:55 am in Software, , , , ,

Sun Microsystems Keeps Scrambling For Revenue

Sun Microsystems (SUNW) has come up with another new way to make revenue. It sales were flat in the last quarter, and that does not seem likely to change in the next quarter or two.

SUNW has made an arrangement with IBM (IBM) to market its Solaris operating system along with Windows, Linux, and IBM’s own OS. The Wall Street Journal quotes one expert as saying "developers have already successfully run Solaris on IBM mainframes, which he said is appealing to many customers"

SUNW needs some success. Its shares have fallen from a 52-week high of $6.78 to $4.72, near the 52-week low.

Recently, SUNW said its would begin to market its new chips to rival server companies, but Wall St. is skeptical the competitors would help the company by buying its products.

SUNW also announced that it will market its StarOffice product with Google (GOOG).

But, the core server business at Sun has to start growing again. If it does not, all of these other project won’t make a difference.

Douglas A. McIntyre

Posted on: August 17, 2007 – 4:54 am in Uncategorized, , ,

Media Digest 8/17/2007 Reuters, WSJ, NYTimes, FT, Barron’s

According to Reuters, Dell (DELL) will restate four years of results after an audit that lasted over a year.

Reuters writes that Bear Steans (BSC) will cut 240 jobs in its sub-prime operations.

Reuters writes that Nokia (NOK) has filed a complaint against Qualcomm (QCOM)  with the ITC asking for more bans on the import of QCOM chips.

Reuters reports that Wall St. still has doubts about Amgen’s (AMGN) future, even after the biotech cut 12% of its workforce.

The Wall Street Journal reports that Whole Foods (WFMI) won a round in its merger with Wild Oats (OATS) when a judge refused to issue an injuction to stop the deal.

The Wall Street Journal writes that IBM (IBM) will start to sell the Sun (SUNW) operating system.

The Wall Street Journal writes that Wal-Mart (WMT) is considering opening smaller high-end stores.

The Wall Street Journal reports that Sprint (S) may spend $5 billion on its WiMax initiative.

The New York Times writes that Boston Scientific (BSX) will put two more units on the market to bring in cash to pay down debt.

FT reports that buy-out firms are still in the market for deal despite credit problems.

Barron’s reports that Ebay’s (EBAY) Skype VoIP unit was down for a day due to software problems.

Douglas A. McIntyre

Posted on: August 17, 2007 – 3:17 am in Uncategorized, , , , , , , , , , , , ,

Pre-Market Stock News (August 16, 2007)

(AMGN) Amgen announced 12-14% layoffs and lowered guidance for 2007.
(ANX) ADVENTRX Pharma announces fast track designation granted by the FDA for CoFactor for treatment of metastatic colorectal cancer.
(AUXL) Auxilium Pharma receivef FDA clearance to resume clincal trials for XIAFLEX for the treatment of Dupuytren’s contracture.
(BAX) Baxter awarded pandemic advanced supply contract from Deptartment of Health.
(CFC) Countrywide Financial tapped an $11 Billion line of credit.
(CPHD) Cepheid entered into a 5 year agreement with Northrop Grumman for the purchase of anthrax test cartridges.
(CRM) Salesforce.com trading down 1% today after posting $0.03 EPS vs $0.01 est.
(EL) Estee Lauder $0.45 EPS vs $0.50 est.
(FCTR) First Charter to be acquired by Fifth Third Bancorp for $31.00 per share.
(FLO) Flowers Foods $0.24 EPS vs $0.23 est.
(FLR) Fluor won a contract from Toshiba International for engineering, procurement and construction-related services for two nuclear power plants.
(FTD) FTD Group $0.36 EPS vs $0.28 est.
(GGBM) GigaBeam received an order for four WiFiber links from a new partner that is establishing a metro ethernet network in Los Angeles.
(GRMN) Garmin noted as an immune growth stock in a crummy market.
(JCP) J.C.Penney $0.78 EPS vs $0.78 est.; sees Q3 $1.28 EPS vs $1.43 est.
(KFT) Kraft Foods is considering selling off its cereals unit according to WSJ.
(LMS) Lamson & Sessions enters into $27.00 merger and a $0.30 special dividend as it will become part of TNB-Thomas & Betts.
(MCO) Moody’s may be in trouble with Congress over failures to warn over CDO ratings and risk activities.
(MGPI) MGP Ingredients $0.10 EPS vs $0.14 est.
(NAPS) Napster in marketing pact with Maxfield’s MP3 player in Germany.
(NBF) Nova Biosource Fuels will acquire a biodiesel refinery in Iowa with a 10 million gallon per year capacity.
(QCOM) Qualcomm’s ex-CEO noted that the suits could cost the company over $2 Billion in revenues if all the terms stand.
(SPAR) Spartan Motors chassis unit received a $53 million subcontract order from BAE Systems.
(SUNW) Sun Micro in free download of StarOffice suite at the Google Pack site.
(TTWO) Take-Two Interactive has received a Wells Notice from the SEC.
(WFMI) Whole Foods announced it is extending its offer for Wild Oats.
(WW) Watson Wyatt $0.71 EPS vs $0.67 est.

Jon C. Ogg
August 16, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: August 16, 2007 – 7:35 am in Pre-Market Activity, , , , , , , , , , , , , , , , , , , , , , , ,

Media Digest 8/16/2007 Reuters, WSJ, NYTimes, FT, Barron’s

According to Reuters, China Mobile’s (CHL) net rose 28%.

Reuters writes that Amgen (AMGN) will fire 14% of its sales force.

Reuters reports that Hasbro (HAS) will increase inspection of products from China after Mattel (MAT) recalls.

Reuters also reports that Take Two (TTWO) has received a Wells Notice from the SEC.

The Wall Street Journal reports that Kraft (KFT) is working on selling its Post cereals business.

The Wall Street Journal writes that a KKR affilate is delaying paying $5 billion in short term debt.

The WSJ writes that Paul Allen is considering taking Charter (CHTR) private.

The WSJ writes that several reporters have sued HP (HPQ) for spying on their phone calls and records.

The Wall Street Journal writes that Google (GOOG) has begun to market Sun’s (SUNW) StarOffice product.

The New York Times writes that NetFlix (NFLX) is using high-end customer service to compete with Blockbuster (BBI).

The FT writes that the EU will investigate bond rating agencies Moody’s and S&P for poor calls on sub-primce issues.

Batton’s writes that buying EMC (EMC) could be a cheap way to get part of the IPO of one of its divisions VMWare (VMW)

Douglas A. McIntyre

Posted on: August 16, 2007 – 3:16 am in Press Digest, , , , , , , , , , , , , ,

Google + Sun >OR= Microsoft; And 2 + 2 = 2.624356 (SUNW, GOOG, MSFT, VMW)

The second tier, albeit with ambition, StarOffice(TM) office suite software package from Sun Microsystems (NASDAQ:SUNW) has finally made a name partner for the download universe.  Enter Google (NASDAQ:GOOG).  The StarOffice suite is now available through the Google Pack software download service.  This may actually be the one of the more true unification of Sun’s office software suite that is compatible with Microsoft’s (NASDAQ:MSFT) Office documents, but this is merely a small battle win in war that has been mostly lost.  Part of the reasoning for this statement is easy: If it’s free, then what is the incentive?

Maybe this new web search functionality within the suite is a help, but it is hard to imagine that very much of the tech geared technorati out there is going to instantly dump MS Office 2007 (or 2003) for the sudden cost savings.  Even if this is compatible under the OpenOffice and in support of the Open Document Format, how many businesses and how many well to do tech-oriented persons are going to TRULY dump Microsoft?  Exactly.  I have had hopes for Linux for literally 8 years and can even remember my first "Linux For Windows" software package that was nothing more than a demo after it was all said and done.

Linux in theory is great.  StarOffice(TM) in theory is great.  Open Office and the Open Document Format is great, in theory.  But when governments and major businesses use the Microsoft linchpin OFFICE the rest of this is just theory as far as total dollars spent is concerned.  Open source software is a great concept, but the fact that most of the initiative was too open has created a model set to fail.  It takes more than brains alone because the money flow and incentive has to be there.  Until a major "Linux-Only" initiative comes marching down Wall Street with Wall Street’s blessing then we are just having a theoretical discussion. 

The truth is that we’ll probably try this out personally.  But we aren’t scrubbing our Microsoft programs yet.  Until all of these new initiatives are able to get a major world government to unilaterally dump Microsoft for one of these open source formats then this is still cottage industry that will stay a cottage industry.  The cottage may turn into a manor, but that manor hasn’t proven it can become a citadel.  These are controversial statements and some readers may think "these are fighting words," but so far history has been more than on Microsoft’s side. 

We have cheered for a dual system universe since the 1990’s, but here we are still wishing.  Same old same old.  We may be running much of the same version of a future story in 10 years.  Maybe by then the prevalence of alternative software may have taken more share.  VMware’s (NYSE:VMW) virtualization packages may help this process, but in case you hadn’t noticed none of the ‘add on’ and virtualization packages out there really get rid of Microsoft and its expensive bulky products.  Most of us will still probably be buying some form of Office or Windows for another generation, if not more.

Sometimes the easiest solution isn’t the best solution, even if it makes sense in the long haul.  Logic dictates that a citadel can have many cottages, but not many cottages will become citadels.

Jon C. Ogg
August 16, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: August 16, 2007 – 12:24 am in Internet, Software, , , , , , , ,

Sun’s (SUNW) Fall: A New 52-Week Low

Sun Microsystems (SUNW) sold off today and hit a 52-week low at $4.50. Its 52-week high is $6.78.

The company put out mediocre numbers on July 30, so this is a bit of a delayed reaction. The company’s revenue was flat for the quarter, at about $3.5 billion. The company had an operating profit of $325 million compared with a loss of $335 million the year before. Most of the improvement was due to lay-offs and other cost controls.

Sun said that it plans to cut more expense in the quarters ahead. But, that leaves the mixed message of whether the company wants to downsize more due to lack of revenue growth.

In May, Sun said it would buy back $3 billion worth of shares, which is over 15% of the outstanding. The move clearly has not pushed up the price.

There is no single issue keeping the stock price down. One school of thought is that the company cannot grow because it faces too much competition from companies like IBM (IBM) and Hewlett-Packard (HPQ).  As Morningstar points out, Sun does not have the "depth and breadth" of produccts to compete across a wide range of markets. Another theory is that Sun’s embracing of open source software is not likely to increase its customer base.

Whatever the reason, it looks like Sun will be stuck at the bottom of its trading range for some time

Douglas A. McIntyre

Posted on: August 10, 2007 – 8:53 am in Technology Companies, , ,

Sun’s (SUNW) Shares Don’t React To Job Cuts

Sun (SUNW) filed a document with the SEC that indicated that it would make more job cuts. About a year ago, Sun fired almost 5,000 people, about 12% of its work force.

Sun’s shares were flat on the news The company said that it intends to take charges of $100 million ot $150 million for the cuts.

The company’s shares might have gone up on the filing. In the last quarter, sales for the server company were flat, but the company had a small net income, mostly due to cost savings. Further work force reductions might drive better margins.

But, Wall St. seems to have seen through that smoke. If Sun’s revenue is going to recover, it cannot continue to lay off staff. At some point it will have to get down to a core level of personnel if it plans to sustain growth.

More departures often mean that a company doesn’t believe that it can expand in future quarters.

Douglas A. Mcntyre

Posted on: August 7, 2007 – 12:20 pm in Uncategorized,

Media Digest 8/7/2007 Reuters, WSJ, NYTimes, FT, Barron’s

According to Reuters, Bear Stearns (BSC) has several potential buyers including JP Morgan (JPM) and Bank of America (BAC)

Reuters writes that a court overturned a patent infringement award won by Alcatel-Lucent (ALU) in a case against Microsoft (MSFT).

The Wall Street Journal writes that tough credit markets could slow share buy-backs by public companies.

The Wall Street Journal also writes that mortgage problems have hit buyers of high-end homes and rates for jumbo loans are increasing.

The Wall Street Journal reports that Microsoft (MSFT) has cut the price of its XBox 360 by $50.

The Wall Street Journal says that the White House passed on reversing a ban on imports of handsets containing Qualcom (QCOM) chips which violate certain patents of rival Broadcom (BRCM).

The Wall Street Journal reports that Ford (F) may have trouble Jaguar and Rover due to emissions standards in the EU.

The WSJ also reports that McDonald’s (MCD) will raise wages in China.

The WSJ reports that the National Music Publishers Association have join a copyright lawsuit against Google’s (GOOG) YouTube.

The WSJ reports that Cisco (CSCO) wants to turn itself into a consumer electronics company like Sony (SNE) and Apple (AAPL).

The Wall Street Journal also writes that Sun (SUNW) is introducing a powerful new chip that it hopes it can sell to other server companies.

The New York Times writes that Pfizer’s (PFE) new AIDs drug has received approval from the FDA.

FT writes that a study predicts that internet ad spending will pass newspapers in 2011.

Barron;s writes that Local.com (LOCM) beat Wall St.’s forecasts in the last quarter.

Douglas A. McIntyre

Posted on: August 7, 2007 – 3:16 am in Uncategorized, , , , , , , , , , , , ,

Yet Another New Business For Sun (SUNW)

Sun Microsystems (SUNW) says it has created a new microprocessor that works so well that it will be able to sell it to other companies. Instead of doing one programming sequence, the Sun chip can do many. According to The Wall Street Journal: "Where most chips typically handle one to four threads at a time, Sun says its new offering can execute as many as 64 at once."

The new product may not have an easy birth. Upon hearing about the chip, IBM management said a the processor was a "niche" product. Not a very kind approach.

Several other observers say that it will be hard for Sun to get competitors to use its processor.

Sun should get an "A" for effort. It still needs something to get Wall St. interested in the company. After releasing quarterly results with flat revenue compared to the same quarter last year, investors started to turn on the stock. Over the last month, the shares are down 9% and now trade at $4.96, near their 52-week low.

Sun continues to present itself as a confused collection of businesses that issues press releases about its "next big thing" fairly often. But, at this point, no one is listening.

Douglas A. McIntyre

Posted on: August 6, 2007 – 6:19 pm in Uncategorized,

Pre-Market Analyst Calls (August 2, 2007)

AAPL started as Buy at B of A.
ALVR raised to Buy at First Albany.
BARE cut to Sector Perform at CIBC.
BRCM raised to Outperform at CIBC.
COCO raised to equal weight at Lehman, raised to Outperform at Piper Jaffray.
DB cut to Peer Perform at BEar Stearns.
DELL started as Buy at B of A.
DJ raised to Equal Weight at Lehman.
EDS cut to Hold at Jefferies.
ENDP cut to Neutral at UBS.
FCH raised to Outperform at Wachovia.
GMR raised to Outperform at Bear Stearns.
GYI cut to Sell at Deutsche Bank.
HPQ started as Buy at B of A.
IBM started as Neutral at B of A.
MI raised to Buy at Deutsche Bank.
MRVL cut to Sector Perform CIBC.
MVIS started as Buy at Merriman Curhan Ford.
OMX raised to Overweight at JPMorgan.
Q raised to Outperform at CIBC.
SUNW started as Buy at B of A.
SYMC raised to Outperform at Baird, raised to Outperform at FBR.
ZGEN raised to Buy at B of A.

Jon C. Ogg
August 2, 2007

Posted on: August 2, 2007 – 7:02 am in Analyst Calls, , , , , , , , , , , , , ,

Sun’s (SUNW) Poor Quarter

Sun Microsystems (SUNW) will be up today. Up big. After hours, the stock move as much as 11% on the plus side. That took them to $5.40, still well below their 52-week high.

Over the last six months, Sun’s shares are down over 25%.

Perhaps the reason the stock is not up more is that Sun’s revenue is not growing. At all. Revenue for the quarter was $3.835 billion. In the same quarter a year ago, the number was $3.828 billion. Net income was $329 million, reversing a loss a year ago of $301 million.

But, cutting costs can be done once or twice, and then it is done.

The market may not be bidding up Sun’s shares more because its still faces very hard competition in the server markets from Hewlett-Packard (HPQ), Dell (DELL), and IBM (IBM). Each is larger and has more resources.

Perhaps worse than that, the entire industry is facing virtualization software from companies including IPO candidate VMWare. Barron’s quotes one analyst as saying: "We expect the server installed base to barely grow beyond 2008." The new software should be particularly hard on Unix servers which are about a third of Sun’s revenue.

When it looked like Sun was coming out of the woods in mid 2006, the stock ran from $4.20 to $6.69 in February of this year. Since then, it has given most of that back.

Sun may rally, but it won’t last.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: July 31, 2007 – 4:49 am in Uncategorized, , , ,