SUN MICROSYSTEM

Business 2.0 sent me an email report on the SUNW--GOOGLE mashup. The indications are that GOOGLE will purchase thousands of SUNW servers. SUNW uses AMD dual core chips that are the size of pizza boxes. They are perfect for the GOOGLE racks and racks of computers because they are fast and cool. Heat is a major problem in data centers.

The SUNW servers run Linux, MSFT and SUNW software. The folks at ZD NET as recounted earlier, seem to have it right. The "FAT" MSFTsystems are not needed by the majority of users. The average person needs a simple interface and access to much information; video, audio and text.

Several months ago, it was true that GOOGLE operated 10 data centers in the US with about 10,000 off the shelf computers in each center. It has been reported that GOOGLE is in the process of expanding to 60 data centers. These centers are connected by heavy duty "fiber highways" and will offer the "jumping off" place for GoogleNet.

The ties betweenGOOGLE and SUN are tight; the cofounder of SUN was the first investor in GOOGLE and Eric Schmit was at SUN before he was hired to run GOOGLE.

Commercial real estate agents report that data centers are in short supply. Many folks are not aware of the heavy capital spending cycle that is upon us. Businesses are going to be bidding for space and resources. Unemployment is relatively low. The FOMC must continue to raise short rates to "cut future inflation off at the pass". The consumer is going to get squeezed a little in the process.

Investors should consider steady earning growth stocks in the consumer staple and heath care areas to balance more aggressive investments made in the high tech area or business service area (such as airlines). Energy stocks are in "bounce" mode. The stocks have run up, down and are headed back up. I would be cautious here.

The cobweb supply and demand curve of energy is about as unpredictable as it gets. Furthermore, the stock prices discount what will happen next year, not this years earnings. Oil company earnings will be extremely strong this year. However, billions of consumers have been hit hard by the recent spike in gasoline prices. The developing nations have been hit twice as hard as the rest of the world. The cutbacks in countries such as Indonesia and India are more severe in percentage terms than in the US.

The SUNW computers are energy efficient. I have not looked at the GOOGLE financial statement to see their electricity expense but it has to be a significant number. SUN has fought the good fight to survive up against the likes of IBM and Dell. The company made it through the "wars". With GOOGLE as a major customer, other companies will think twice before buying IBM servers. IBM has mounted a major advertising campaign. IBM is a late cycle stock. I expect IBM to do well in the progressing business expansion. However, I expect SUNW to gain share. The share gain at SUNW should have a powerful impact on the price of SUNW shares. BUY THE BULL!

IT IS TIME TO BE AGRESSIVE. THE PUBLIC IS AFRAID OF EVERYTHING FROM BIRD FLU TO HURRICANES. THE BOTTOM IS NEAR. BUY NOW TO AVOID MISSING A GREAT OPPORTUNITY.

THIS WEEKS VOTE IN IRAQ COULD BE THE SPARK NEEDED. IRONICALLY, I BELIEVE IT MAY TURN OUT BEST IF THE CONSTITUTION IS DEFEATED. IF IT IS, THE MARKET MAY TEMPORARILY DROP. IN THE LONG RUN, IT MAY MEAN A TRUE DEMOCRACY TAKES HOLD!