Sun Purchase Bolsters Capabilities
Thanks to its April acquisition of Sun Microsystems, Oracle had already built an even more substantial beachhead in the middleware category, allowing it to compete more effectively against IBM's DB2 database middleware. On April 20, Oracle announced plans to purchase Sun in a deal worth roughly $7.4 billion, or $9.50 a share, in the process creating a multiarena competitor to IBM, Hewlett-Packard, Dell, Cisco Systems and others. The acquisition allows Oracle to expand its end-to-end capabilities while deepening its usage of Java and Solaris, both of which lie at the heart of many of its product lines.Despite the recessionary environment, though, Oracle has managed to maintain its market share in a number of key areas, as well as increase its earnings. In the third-quarter fiscal 2009, the company's earnings per share were up 3 percent versus the same quarter last year, to 26 cents; overall revenues were up 2 percent to $5.5 billion, although quarterly net income was down nearly 1 percent to $1.3 billion. "We're competing more effectively across the board in all our product areas," Larry Ellison, Oracle CEO, said in an analyst call concerning those numbers in March 2009. Apparently not satiated by its giant takeover of Sun, Oracle soon purchased Virtual Iron, a designer of server-based virtualization hardware that would allow it to compete more robustly in the market against VMware, Microsoft and Citrix Systems. Previously, Virtual Iron had attempted to challenge VMware and Citrix Systems on its own, mostly by offering its virtualization tools at a lower cost. However, the company never managed to seize any sizable market share, and Oracle evidently saw its technology as a way to buttress Oracle VM, which would then offer Oracle's customers the option to virtualize within the company's ecosystem as opposed to relying on a product from VMware or other companies. Oracle's acquisition spree represents a continuation of its pattern from 2008, when it purchased 11 companies. Its string of purchases includes mValent, which produces configuration management applications, and Relsys International, which builds drug safety and risk management products.
IBM had reportedly been in discussions to purchase Sun during the same period, for an amount rumored to pass $7 billion before talks collapsed in early April. Sun, which was struggling in the midst of a contracting server and data center market atop a massive global recession, was widely seen as needing to sell either itself or its assets to another company or risk collapse.