Sun Microsystems Must Love Cheap Component Prices (SUNW)

Sun Microsystems (NASDAQ:SUNW) posted earnings of $0.09 EPS GAAP and $3.835 Billion in revenues.  Estimates were $0.05 EPS and $3.84 Billion revenues, but the GAAP EPS also had soem charges in it.  We have no formal guidance so they are holding off until the conference call.  It even generated $564 million cash in the quarter and total gross margin as a percent of revenues for the fourth quarter was 47.2%.

What the company had going for it in general was cheaper component prices and a somewhat strengthening demand from corporate America for technology spending, but we’ll have to see if those are the reasons for the beat on EPS estimates.  Unfortunately, Sun Micro Systems has seen its shares roll over fairly hard since recent highs from earlier in the year.  Shares are way off the private equity investment highs from earlier this year and shares sold off 10% in recent days in a weak market.

In normal trading, Sun closed down 0.6% at $4.89.  Shares are actually up 9% at $5.31 in reaction in the after-hours trading session.  The chart on this one despite the after-hours pop is going to be hard to call with what looks a bit directionless no-man’s land patterns.

Jon C. Ogg
July 30, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.