Being cynical about Sun Microsystem’s prospects has been a religion of sorts on Wall St. But, some of the faithful have fallen away. After trading at over $14 in late 2001, the stock ran down to $3.80 this last July, It is now near its 52-week high, trading at $5.58.
Sun’s long-time CEO Scott McNealy moved upstairs to the Chairman’s office, and Sun’s new servers have gotten good reviews and started to pick up share. Sun ranks fourth in global share at just above 10%, But IBM is well ahead of it at 33% and HP is as well at 25%. There is also a concern that the sales of virtual servers will begin to cut into the entire x86 market.
The concern that Sun’s recent growth has come from acquistions helps drive skepticism. A look at the recent 10-Q shows that StorageTek and See Beyond, recent purchases by Sun, have fueled a lot of the topline. That may not be the case as the company moves into 2007.
With a December increase in shares short of 6.9 million shares to 36.8 million, some in the market are betting that Sun’s recent highs are it for now.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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