Salomon Smith Barney lowered its investment rating on computer server maker Sun Microsystems (SUNW) to neutral from buy, citing concerns related to revenues. Sun closed off 1-1/2 at 30-7/16.
Analyst John Jones says he is concerned revenue and earnings growth will come at the expense of drawing down backlog rather than from new orders. Given his prior concerns about pockets of softness in its business, today's call has further heightened valuation risk.
Jones cut his fiscal year 2001 earnings per share estimate to $0.69 from $0.71, and his fiscal year 2002 estimate to $0.85 from $0.90. He also cut his price target on the stock to $30 from $55.