IBM Can Probably Sell Sun Better than Sun Can - Page 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 company-most likely the software portion-would 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 easier-or simpler-every day.

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 15 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...