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Sun Microsystems Inc (NASDAQ: SUNW) reported light results last night, blaming weakening enterprise demand at quarter's end for the revenue shortfall. Gross margins came in at 44.5% versus expectations of 45.2%.I think it is too early to jump into Sun's stock. Sun acquired a company called StorageTek a few years ago which contributes a lot of revenue for the server manufacturer, this business will also show weakness as demand for enterprise technology continues to weaken.
Sun also raised a boat load of capital recently from private equity, most likely to be used for a large acquisition. Typically, Sun's business does not turnaround quickly. I'd wait for revenue and some news on what it is going to do with all this cash before getting into this stock.
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Reader Comments (Page 1 of 1)
4-27-2007 @ 4:19PM
tape guy said...
StorageTek was predominately a tape drive and ATL manufacturere. With Virtual tape now being widely accepted, applications for tape continue to dwindle. With IBM, ADIC and others fighting for the same raised floor space, tape libraries will take the hit. Sun also has major problems with their new order entry system, upsetting their salesforce immensely.