) hold from buy.
Analyst Amit Chopra says fourth quarter product gross margins fell 160 basis points sequentially as profitability was hurt by aggressive pricing, discounting and sales promotions. He notes management guided 10%-15% first quarter fiscal 2003 (June) sequential revenue fall.
Chopra thinks the maker of servers for networks -- especially its Unix server business -- is facing increased competition from more economically priced Windows and Linux operating systems, and an IT spending slowdown; price competiton already is intensifying in Sun's mature Unix server and in the workstation market.
He cut the $0.16 fiscal 2003 earnings per share estimate to $0.08, and sees $0.16 fiscal 2004. He cut Sun's $20 12-month fair value estimate to $5.