Looking for a Suitor

By Chris Preimesberger  |  Posted 2012-01-17 Print this article Print

Schwartz realized early on that Sun wasn't going to continue to stay in business using its old formula, so, in 2007, he started looking for a suitor. This rankled McNealy, who later proposed taking Sun private, but the idea didn't fly with the board of directors.

By April 2009, Schwartz and the board had IBM set up as the buyer. All the due diligence was completed, but at the last hour, "IBM overplayed its hand," and the deal was off, Schwartz said.

Other sources said that some personal "golden parachutes" (lucrative guarantees to certain Sun executives to leave the company) got out of hand, so IBM pulled out for that reason.

Fortunately, McNealy had lined up Oracle and his multibillionaire friend Ellison as a fallback. After IBM dropped out, Oracle bought Sun and all its franchises for a sum in the neighborhood of $7.4 billion. The move put Oracle squarely in the full-service IT race with reigning champions IBM and HP and in a stronger position against the likes of Dell, EMC and Cisco.

Oracle Now 'Finding Out'

Since the takeover, Oracle has been battling to turn the Sun hardware business into a profitable one-something Sun hadn't been able to do in more than a decade. Oracle's 2012 second-quarter fiscal report revealed that the hardware business was down 14 percent over a year ago, so the struggle continues.

"I think Oracle's now finding out how tough that business is," Schwartz said.

The continuing difficulties Oracle has encountered with Sun reinforce that point and suggest it was fundamentally weaker than the company's most vocal proponents ever imagined, analyst King said. "Schwartz seems to have recognized those flaws and tried to deliver Sun to a suitor with the assets and incentive to get the company back on track," he added. "Whether Oracle will ever accomplish that is unclear."

Schwartz learned a lot while in Sun's executive chair. He grasped the importance of online communications (via blogging), social media tools like Twitter and leveraging the Web to improve corporate transparency years before other senior executives did. Those attributes make Picture of Health and Schwartz well-worth watching, King said.

Though Schwartz said he couldn't yet provide details on Picture of Health, he did say that focusing on health has been a "personal choice" for both him and CTO and co-founder Walter Smith, a former Microsoft executive.

"Health care is a deeply personal thing; it's tough to say the same about servers and specialized microprocessors," Schwartz said. "Mums, Dads, children, friends, loved ones, nurses, doctors, even insurance companies and governments-everyone cares about health and well-being."

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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