Sun Microsystems: Showing Signs of Growth

May.21.07 | About: Sun Microsystems (JAVA)

Sun Microsytems (NASDAQ:SUNW) is still a turnaround, but now there is potential for upside.

Analysts met with Sun Microsystems CEO Jonathan Schwartz and came away convinced that investors should use the recent pullback to add to positions in order to participate in the ongoing turnaround.

It now is focusing on cost reduction (with operating expenses declining in 2008 from 2007), along with growth (although growth may take longer to show). The company gave no new guidance and is maintaining estimates.

Perhaps most encouraging was that due to new products, Sun Microsystems now has the potential to exceed models of moderate revenue growth - now at 6% - over the next few years - although no analysts are modeling any upside in numbers.

SUNW remains focused on achieving its stated margin targets of 4% in 4th quarter 2007 and 10% for fiscal year 2009.

SUNW 1-yr chart
SUNW 1-yr chart