Site icon Schnitger Corporation

Surprise! Oracle buys Sun

It hit the wires this morning: Oracle has agreed to pay $9.50 a share for Sun, a transaction
the companies have valued at $5.6 billion, excluding Sun’s cash and debt. The deal gives
Oracle the ability to sell hardware as well as its database technology — and perhaps the
ability to incorporate Sun’s popular Java and the Solaris OS. In fact, Larry Ellison, Oracle’s
CEO, described Java as "the single most important software asset we have ever acquired"
and expects Oracle to be able to offer bundles of applications and computers and
data-storage hardware

Oracle believes that it has the magic dust needed to make the acquisition pay off quickly.
Although Sun reported losses in three of the last four quarters, Oracle execs estimate that
Sun will contribute more than $1.5 billion to Oracle’s operating profit in the first year and
over $2 billion in the second year of the combined entity. Nothing I heard on the conference
call replay explains how Oracles plans to do that, but then the execs on the call weren’t
taking questions.

This month alone, SGI and Sun were acquired. HP, a few years ago. Clearly, Unix box
building can’t sustain a company in the long run. Surprising, no? Hardware margins are
always hard to sustain after widespread adoption. Sad, yes.

Exit mobile version