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Monday, July 10, 2006

Most Widely Traded 48 Hour Clock: Sun Sinks Slowly In The West

247WallSt. has begun coverage of the 36 most widely traded stocks, eighteen each from the NYSE and the NASDAQ. Most of these stocks trade over 50 million shares a week. This new feature will highlight each of the 36 stocks at least every 48 hours giving investors fresh infomation and perspective on the companies whose shares are most likely to move the broader markets.

Stocks: (SUNW)(HPQ)(IBM)(DELL)

If you visit California's Silicon Valley, you may find that the initial enthusiam about a new CEO and cost cuts at Sun Microsystems has worn off. The stock now trades at $3.82, the lowest it has been since late 2005.

The news from the company has been extraordinarily weak. The company recently announced its commitment to high performance computing with a new product that uses AMD Opteron processor cores, but there is little evidence that this is a large market for the $11 billion revenue company. Sun is releasing several new Opteron based systems including a high performance media server and new blade server packages.

However, as The Register, the UK tech site has pointed out, there products indicate that there is very little new under the sun. Other companies have products that can compete with the new Sun product lines. According to The Register, there is "going to be a real slugfest where Sun has to go up against IBM, HP and Dell – all of which support both Xeon and Opteron".

The Register goes further by adding that "for Sun to stand-out again and to drive interest in Solaris, which is key to the company's future, it must have an exceptional, surprising seller. It needs some systems that really capture customers' attention and separate Sun from the herd".

The stock trades in a fashion that indicates that almost no one on Wall Street thinks that Solaris, Sun's operating system, has much of a chance to gain share in the market or that its new servers are diffentiated in any way that will make a meaningful difference to customers.

Sun's income for the fiscal just ending (June 30) is likely to be little better or worse than the $11 billion that it brought in for each of the last three fiscall years. By contrast, even Dell, which is no longer an investor darling, has posted relatively strong revenue improvement three years in a row. And, HP has been resurrected by new management and is now viewed as a fairly formidable competitor to companies like Sun. HP's stock reflects this, having gone from under $24 earlier this year to the current $32.50.

The recent success of HP is an indication that companies like Sun can see their fortunes improve. If they have the right people running them.

Douglas A. McIntyre can be reached at He does not own securities in companies he writes about.

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