Sun Microsystems Inc. (NASDAQ: JAVA) is a stock we have featured negatively in our weekly newsletter for "10 Stocks Under $10" on many occasions. We even started covering it long before it was under $10.00 in its share price because we believed it was destined to go there. We criticized the company again over the weekend and below is a synopsis from the weekly newsletter based upon the $4.12 close on Friday:
The company dropped the bomb on its own workforce this last week as itwill lay off up to 6,000 workers, giving about one-sixth of itsworkforce the boot with severance packages. When we did a partial costanalysis of the charges outlined with severances and related issues, wecame up with a median cost point of $75,000 per employee.
We then tallied up the identity crisis of Sun. Go ask ten tech traderswhat Sun is right now and what it’s direction is. You will get tenanswers, most of them confused.
We are thinking about the market’s preference treatment of stable companies versus unstable companies.
The company can’t even change its ticker and do a reverse stock split,as it did that and it was a disaster too. But Sun should change thename and ticker to Stun Micronothing and "STUN."
They will cut costs and still manage to post losses. It looks like thestock is trading close to its cash value, although that isn’t the casewhen you tally up the debt.
We keep thinking that we would want to at least put it on a watch listto buy at a cheaper price, but we just still see no reason to buy here.
Jon C. Ogg
November 17, 2008
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