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Key to Oracle-Sun Deal: Storage, DB Hardware
By: Chris Preimesberger
2009-04-20
Article Rating:    / 2
There are 4 user comments on this Data Storage, Data Backup and Storage Virtualization story.
Key to Oracle-Sun Deal: Storage, DB Hardware (
Page 1 of 2 ) UPDATED: The good news for Oracle is that it gets immediate new revenue streams. The good news for Sun Microsystems is that most of its hardware people will be needed to maintain those businesses; the bad news is that many software projects will be discontinued and released back into the open-source community. Depending upon how Oracle handles it, MySQL could be a minor player inside the company, or it could be set adrift.The $7 billion acquisition of Sun
Microsystems emanating from IBM on the other side of the continent was supposed to have happened back on April 6. But some thorny legal issues apparently got in the way, and it was not meant to be.
Two weeks later, and for a mere dime more per share, Oracle -- located
a few minutes up the Bayshore Freeway from Sun -- came from out of the
shadows to announce April 20 that it was acquiring the slumping company for $9.50 per share in a cash deal totaling about $7.4 billion.
The keys to this deal are pretty simple:
1) Enterprise software giant Oracle has decided it wants to get into
the storage and database hardware business, where there is plenty of
room for growth, and it believes Sun is the right horse to ride at this
time.
2) Sun has deep and prosperous relationships with customers in the
high-performance computing, telecommunications and government sectors
that Oracle can now mine for more business.
3) The price was right. Oracle won't have to finance much, if anything. The transaction actually nets out to about $5.6 billion after Sun's liquid assets (an estimated $1.8 billion) are taken into consideration; Oracle has $8.2 billion of its own in cash and cash equivalents.
Speaking of financing, eWEEK had exclusively reported on March 24 that Oracle had considered an offer, in conjunction with Hewlett-Packard, to acquire Sun late in 2008. But Sun at the time still had IBM interested and turned down the proposal; Oracle was, in fact, Sun's fallback plan when the IBM deal blew up.
There's one more key to the deal: Oracle founder and CEO Larry Ellison will
finally have his own operating system in Solaris and OpenSolaris. When
this deal is completed sometime this summer, he'll be able to kiss
Microsoft and Red Hat goodbye to an extent -- and not have to pay the
substantial operating system "tax" he's been paying for years.
The good news for Sun is that most of its hardware people will be
needed to maintain the server and StorageTek storage businesses; the
bad news is that many of its prized software projects will be
discontinued and released back into the open-source community.
Sun Will Soon Be Out of Hot Water
Sun is in a deep tub of hot water financially, having lost tens of
billions of dollars during the last eight years since the x86 server
revolution began murdering its very high-margin Solaris server
business. The company, which had laid off tens of thousands of workers
over the last four years, was in a serious red zone of becoming
bankrupt -- perhaps as early as next year.
This acquisition by financially sound Oracle not only saves Sun from
insolvency, but it also keeps a big number of large enterprise
customers out of a serious IT quandary, should Sun's services suddenly
have gone dark.
"Oracle now will be able to provide database servers and storage
systems, which will be additional revenue streams for them," Forrester
analyst John Rymer told eWEEK.
"As far as Sun's software goes, doesn't sound like they're [Oracle]
expecting anything particular to come from that. [Oracle CEO] Charles
Phillips talked about how great it will be to have control over Java,
because we all rely on it so heavily -- not because it's going to
produce big new revenue streams."
| | Reader Comments: Key to Oracle-Sun Deal: Storage, DB Hardware | | >>> Post your comment now!
| | Yes, but ...This is Chris P, writer of this story. Of course, the customer list is central to this deal. However, many of the high-end customers Sun has been... Posted At: 04-21-09 By: Chris Preimesberger | | | | | | Good pointsThis is Chris P, writer of this story. Excellent points, especially about Pillar Data Systems, 100 percent owned by Mr. Ellison. No question the... Posted At: 04-21-09 By: Chris Preimesberger | | | | | | The customer listThe customer list is what is at stake here, not the hardware. IBM wanted Sun for the same reason. Look for the hardware division to be sold off to HP... Posted At: 04-21-09 By: Anonymous | | | | | | Not really...Storage?...That would be Larry's Pillar Systems and HDS and whatever other Junk Sun couldn't sell to anyone in the last 10 years after launch after... Posted At: 04-21-09 By: dennisl59 | | | | | | >>> Post your comment now! | | | | | |
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