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IBM Can Probably Sell Sun Better than Sun Can
By: Chris Preimesberger
2009-03-18
Article Rating:    / 14
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IBM Can Probably Sell Sun Better than Sun Can - Merger: Potentially the Best Outcome for Sun? (
Page 3 of 3 )
For Sun, a potential merger is the best outcome that management and shareholders
could ask for, Enterprise Strategy Group analyst Brian Babineau told eWEEK.
"They have been trying to transition their business from a
hardware-centric model to an open-source software [model]a difficult task
given the economic times," Babineau said. "They are continuously
reacting to market conditions with layoffs and other expense control items
while trying to turn the ship. While they have had some success in building out
some of their open storage platforms, the revenue is not material enough to
spur growth to create enough shareholder value."
One option that no one is discussing, Babineau said, is the possibility of a
"carve-out" in which IBM would buy
a portion of Sun, and the balance of the companymost likely the software
portionwould remain as a smaller entity.
"This would allow Sun to execute its strategy without the burden of the
hardware legacy," Babineau said.
Veteran analyst David Hill of the Mesabi Group concurred.
"The proposed acquisition would be a blessing for all concerned,"
Hill told eWEEK. "The Sun sunset would be bright without having to go
through the blackness of a possible bankruptcy.
"IBM, with its size and experience, is
one of only a few companies that could absorb the disparate parts of Sun. So
Sun stockholders and employees benefit, but so do Sun customers as well. IBM
benefits as it gains the IP [intellectual property] and customer base and
strengthens its competitive position. Moreover, the whole IT community benefits,
as Sun has been a major contributor to IT innovation and it would be a shame if
all its ongoing good work were to die."
Finally, it hasn't been a good week for HP and Dell and the Japanese systems
makers such as Hitachi, Fujitsu and
NEC.
On March 16, networking king of the hill Cisco Systems announced its move into
the data center systems business; two days later, IBM
and Sun are talking about becoming family.
The IT business world certainly doesn't become easieror simplerevery day.
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