Sun Microsystems ripe for takeover?

“With falling revenue, problematic acquisitions, product slips and a stock that has lost three-quarters of its value in the last year, Sun Microsystems is finding that Wall Street is losing patience,” Ashlee Vance reports for The New York Times.

“For its first quarter, ended Sept. 28, Sun reported a net loss of $1.68 billion, or $2.24 a share, compared to net income of $89 million, or 10 cents a share, in the same period last year. The loss includes a $1.45 billion charge to write down the value of past acquisitions and a $63 million restructuring charge,” Vance reports. “The company’s revenue dropped 7 percent, to $2.99 billion, from $3.22 billion in last year’s first quarter.”

“Sun’s servers and Java software are the driving force behind many Web sites and business operations. But in recent years, Sun has struggled to adapt as customers gravitated away from its high-end machines that use custom software and processors to cheap computers powered by commodity parts and free, open-source software,” Vance reports. “Sun’s bets on new server and storage systems, new processors and its own open-source software have not come through as fast as the company had hoped.”

“Sun moved Thursday to placate Wall Street by disclosing more information than usual about its various product lines, showing strong growth with some of its more radical server designs and traditionally slow-selling storage products. It also hinted at impending layoffs,” Vance reports. “It is unclear if that is enough to satisfy some of Sun’s largest investors. ‘They need to cut,’ said Chris Whitmore, an analyst with Deutsche Bank.”

“Over the last few months, Southeastern Asset Management, a Memphis investment firm run by O. Mason Hawkins, has acquired more than 20 percent of the company. Southeastern has said it expects to actively engage in discussions with Sun’s management and third parties about the company’s future,” Vance reports.

“Last November, Sun tried to polish its image through a one-for-four reverse stock split. Over the last 11 months, Sun shares have tumbled to pre-split prices,” Vance reports. “Sun remains a cash machine, however, taking in more than $1 billion during its last fiscal year… Morale inside Sun, long a favored bastion of top engineers, is sagging, according to current and former employees. The company has endured a number of large layoffs in recent years, although the company still employs about 33,000 people.”

More in the full article here.

[Thanks to MacDailyNews Reader “HueyLong” for the heads up.]

MacDailyNews Note: Sun Microsystems’ (JAVA) market cap currently stands at $3.65 billion.

34 Comments

  1. Could be a Trojan Horse for Apple for large enterprise clients. The installed based of Sun is an interesting opportunity to access IT acceptance from a server and storage side.

    Also, if Apple is controling Java, imagine the impact on all web sites and server around the world. Let’s say that Apple release a special version of Java for Mac OS X Server that leverage Snow Leopard (Core animation, OpenGL, Open CL, …). Apple can benefit from lots of enterprises that will migrate their servers to leverage the new Java functionalities.

  2. It may be a good time for a Sun takeover but Apple is the wrong company to do it. Reworking OSX into an enterprise-targeted OS is the wrong design strategy, and maintaining OSX alongside Solaris will fragment resources and result in major customer confusion. Apple’s corporate strength is its focus on the end-user experience and they should not make the mistake of refocusing on high-end computing and risk ending up with a ridiculously complex OS (Microsoft’s mistake). As for Java, Apple has already decided that Java is not their future and they should stick with that decision. A final point is that the crucial component of retaining enterprise customers is a quality support organization, and Sun’s dirty not-so-secret is that their support organization is awful.

    Google would be a far better fit with Sun, in that Google’s strength is their lack of focus, and due to that strategy they have a constant need for the best engineers. Besides, Android is heavily reliant on Java and Google needs to demonstrate a serious commitment to Android.

  3. Lots of real good technologies to grag there! Say it since 2 years: Apple MUST by SUN! APPLE + PA Semi + SUN = monster servers and tremendous kick in M$’s ass…umption! ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

  4. Reasons why Apple should acquire Sun Microsystems:

    1. Java (control one of the most popular and most used programming language. Improve Java to work better with their WebObjects web application server)
    2. ZFS (advance file system that could be incorporated into OS X)
    3. Solaris (cool stuff from Solaris could be used in OS X. Remember NeXT?)
    4. Enterprise Server Business (To capture the enterprise market and also build their cloud computing solution)
    5. SPARC processors (technologies from this could be used by their PA Semi team to build Apple’s own processors)
    6. StarOffice (incorporate advance features from StarOffice into iWorks)
    7. xVM VirtualBox (Virtualization technologies from Sun xVM VirtualBox could be incorporated natively into OS X to be able to run Windows application thus rendering Windows completely irrelevant.

  5. They do not have much to offer Apple. However if I was in charge of MS I would buy Sun and release Solaris + Win32 compatability box (WIndows Classic) as Windows 7 instead of the Vista Redux.

  6. Sun and Apple do have more compatible corporate cultures then most other companies. Sun could expand Apple’s UNIX OS and Application Engineering depths. Sun also has the SPARC Processors and with Apple’s PA Semi engineers and Sun’s Chip Engineers the possibilities for Ultra Small, Ultra Low Power, Ultra Fast Mobile processors and High-end Mega Server Processors.
    Then their is JAVA and the Enterprise IT server “Big Iron” credibility Sun has.
    The Question is how much if any of Sun does Apple want? And how much of Sun would Apple keep running if they bought Sun?

  7. Anon.. Excellent list!

    Apple has the dough. It would make sense and certainly strengthen Apple in the server department.

    Java? A no-brainer there.
    ZFS is coming to Snow Leopard!
    VirtualBox could use some interface help from Apple’s programmers, too. I’ve used it a bit and it’s nice to be able install Windows on and EXTERNAL drive.

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