S A ADVISORY April - May 2001
"Sun Microsystems - Foundry Networks"


S.A. Advisory
2274 Arbor Lane #3
Salt Lake City, Utah 84117

SUNW - $15.85 * 650-336-0646

SUNW is a worldwide provider of products, services and support solutions for building and maintaining network-computing environments. SUNW sells scalable computer systems, high speed microprocessors and high performance software for operating network computing equipment and storage products.

For 6 months ending 12/31/00, revenues rose 52% to $10.16 billion - net income rose 49% to $933 million.

      Book - $3.30
      Cash - .66
      Debt/Equity - .20
      Shares outstanding - 3.26 B - float 3.16 B
      52 week range - 15.50 - $64.65
      Earnings estimate for 6/01 year end slashed to .51 - while 6/02 rises to .69.

Still trading at 30x 01 year end estimated numbers, but SUNW is a world leader and a premium is usually the price one must pay. Again, most brokerage firms had SUNW rated as a strong buy at the $64 level, but now as SUNW approaches an 80% decline from its 52 week high, they all run for the hills! We rate SUNW as a buy at current levels for long-term investors (2 to 4 years). With patience, SUNW could easily be a 200% to 300% gainer from current levels.

We intend to monitor SUNW in our newly formed portfolio within our last newsletter, namely, Dec - Jan 2001.

Broker contact: Greg Nelson at 1-801-256-2160.

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FDRY - $8.50 * 408-586-1700

FDRY designs, develops, manufactures and markets an end to end suite of high performance networking products for enterprises, educational institutions, government agencies, web-hosting companies, application service providers, electronic banking and finance service providers, and Internet service providers. The company's Internet routers, Gigabit Ethernet Layer 2 and Layer 3 switching routes and Internet traffic management systems enable customers to build and maintain efficient, high performance networks. Foundry products are installed in some of the largest Internet services providers, including AOL, Earthlink, AT & T Worldnet, MSN and Cable and Wireless.

Year end December 31, 2000 revenues were $377 million, up from $133.5 million. Net income totaled $88.1 million, up from $22.8 million. Result reflects strong demand for FDRY's routers and Ethernet switches.

      Book - $3.01
      Cash - $2.20
      Debt - 0
      Shares outstanding - 117.7 million, float 43.6 million
      52 week range - 8 5/16 - $152 3/8
      Trailing 12 months earnings .70 - PE = 11.9 trailing
      Authorized 5,000,000 shares buy-back expires 10/1/02.
      01 earnings estimate - .91 yield an estimated PE 9.19.

94% off from 52 week high - the contracts are impressive - just read the releases - most analysts have downgraded FDRY to a hold from strong buys. Looks very attractive at current levels.

Trading under 3x book, 3x sales and a dirt cheap actual and estimated PE for 01.

They all loved FDRY at $152.00, now hate it at $8.31. It now appears to SA Advisory as a screaming buy.

Broker contact: Greg Nelson at 1-801-256-2160.

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