A close look at Sun Microsystems

I like Sun Microsystems as a longer-term turnaround play. The company has a great management team, which unfortunately, in my opinion, has made some bad product decisions in the past. And let's not forget the company's war chest of a balance sheet -- that could be useful. In terms of an investment in SUNW stock, at this point investor point expectations (and numbers) are still so low that all the company has to do is show some margin improvement to take the stock higher.

That said, I don't particularly like Sun Microsystems' business model, because it can limit the company’s longer-term development

and potentially relegate the company to being little more than a niche player. One problem at Sun is a failure to have a step up or lead-in line that gives it a consumer presence. The Solaris system needs to further migrate, and the company is in sore need of IC technology to give it a more equal footing with Intel. After ten consecutive EPS-loss quarters, Linux and the new Java initiatives appear to be the brightest spots in Sun’s business.

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