Big Blue Wants To Swallow Sun For $6.5 Billion

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The consolidation in enterprise technology is upon us. Once mighty Sun Microsystems is now reportedly; in talks to be acquired by IBM for a mere $6.5 billion.  That is two quarters of revenues for Sun.  If you factor in the $2.6 billion in cash and short term investments on Sun’s balance sheet, the true offer is closer to $4 billion.  Sun’s shares jumped this morning 65 percent.

Sun’s main Solaris server business has been suffering for years from the onslaught of cheaper open-source Linux servers, which it now offers as well.  But Sun still holds big presence in key industries.  The play for IBM is to consolidate its server market share in the face of increased competition from HP (which bought IT consulting giant EDS last summer), and now Cisco (which is trying to expand into the server and storage markets).  Sun’s commitment to open standards also meshes well with IBM’s philosophy.  Remember, it owns MySQL.  (Larry Dignan at ZDnet has a good analysis here).

The acquisition would create an even greater mish-mash of technologies under the IBM umbrella, but IBM has never had a problem selling incompatible systems.  Sun also has a deep wealth of technology patents and engineering talent that IBM will be able to redeploy.

But if that is all that Sun has to offer IBM, any potential acquisition would just be tactical—a move to shore up market share in traditional data center sales until cloud computing changes the business entirely.  In fact, Sun is planning on announcing today its own cloud computing offerings, which was recently bolstered by its purchase of Q Layer.  Sun’s approach to cloud computing is to offer enterprises mission-critical cloud alternatives which can also play well with the public cloud offerings out there from Amazon, Google, Salesforce, Microsoft, and so on.

That transition will take many forms, from turning corporate data centers themselves into one large virtualized computer to offering true compute, storage, and database services in the cloud.

  • http://www.jasonnazar.com Jason Nazar

    Good move for Sun, the company has been hurting

    BTW Erick hyperlinks are not showing up – the “<ahref” is being displayed on the page

    • http://www.techcrunch.com Erick Schonfeld

      thanks Jason, that was messed up. fixed now

      • LanguageExpert

        Good move IBM. JavaScript was the best version of Java that Sun ever came out with. Now they can own it.

        JavaScript is such a cool version of Java, where else can you get code that looks like this?

        javascript:var s=[105,116,39,115,32,97,32,106,111,107,101,33,32,100,111,110,39,116,32,102,101,101,100,32,116,104,101,32,116,114,111,108,108];var v=””;for (t in s) {v+=String.fromCharCode(s[t])};alert (v);

      • LanguageExpert

        dang Techcrunch changed my quotes. try again:

        javascript:var s=[105,116,39,115,32,97,32,106,111,107, 101,33,32,100,111,110,39,116,32,102,101, 101,100,32,116,104,101,32,116,114,111, 108,108];var v=”;for (t in s) {v+=String.fromCharCode(s[t])};alert (v);

      • LanguageExpert

        Grrrr

        javascript:var s=[105,116,39,115,32,97,32,106,111,107, 101,33,32,100,111,110,39,116,32,102,101, 101,100,32,116,104,101,32,116,114,111, 108,108];var v=String.fromCharCode(32);for (t in s) {v+=String.fromCharCode(s[t])};alert (v);

      • http://techmytongue.blogspot.com vengu

        Languageexpert??? LOL! :-)

    • From India With Confusion

      All of this is over my head. I can’t understand all of this business/MBA mumble jumble. Is this TC or the Wall Street Journal?

    • Smart Babes Are Stupid Spemmers

      …. So what? we Indians are always confused, but that will never stop us from offering bs and spamming – call them opinions, please. I have spoken.

      Anjali Sen

      From India

  • http://www.jasonnazar.com Jason Nazar

    Good move for Sun, the company has been hurting

    BTW Erick hyperlinks are not showing up – the “<ahref” is being displayed on the page

    • http://www.techcrunch.com Erick Schonfeld

      thanks Jason, that was messed up. fixed now

      • LanguageExpert

        Good move IBM. JavaScript was the best version of Java that Sun ever came out with. Now they can own it.

        JavaScript is such a cool version of Java, where else can you get code that looks like this?

        javascript:var s=[105,116,39,115,32,97,32,106,111,107,101,33,32,100,111,110,39,116,32,102,101,101,100,32,116,104,101,32,116,114,111,108,108];var v=””;for (t in s) {v+=String.fromCharCode(s[t])};alert (v);

      • LanguageExpert

        dang Techcrunch changed my quotes. try again:

        javascript:var s=[105,116,39,115,32,97,32,106,111,107, 101,33,32,100,111,110,39,116,32,102,101, 101,100,32,116,104,101,32,116,114,111, 108,108];var v=”;for (t in s) {v+=String.fromCharCode(s[t])};alert (v);

      • LanguageExpert

        Grrrr

        javascript:var s=[105,116,39,115,32,97,32,106,111,107, 101,33,32,100,111,110,39,116,32,102,101, 101,100,32,116,104,101,32,116,114,111, 108,108];var v=String.fromCharCode(32);for (t in s) {v+=String.fromCharCode(s[t])};alert (v);

      • http://techmytongue.blogspot.com vengu

        Languageexpert??? LOL! :-)

    • From India With Confusion

      All of this is over my head. I can’t understand all of this business/MBA mumble jumble. Is this TC or the Wall Street Journal?

    • Smart Babes Are Stupid Spemmers

      …. So what? we Indians are always confused, but that will never stop us from offering bs and spamming – call them opinions, please. I have spoken.

      Anjali Sen

      From India

  • http://soeet.com ChrisATSo33t

    I told you so an entire week ago. I sold all my JAVA to buy C with whatever I had left. I am still not complaining as C outperformed Java 3 going on 4 fold today.

    http://www.techcrunch.com/2009/03/11/socialmedia-launches-interactive-word-of-mouth-social-ads/#comment-2652071

    • http://soeet.com ChrisATSo33t

      Even a 60% can not eclipse the nearly 400% jump of people’s emotional investing behavior. Go, go USA!!

  • http://soeet.com ChrisATSo33t

    I told you so an entire week ago. I sold all my JAVA to buy C with whatever I had left. I am still not complaining as C outperformed Java 3 going on 4 fold today.

    http://www.techcrunch.com/2009/03/11/socialmedia-launches-interactive-word-of-mouth-social-ads/#comment-2652071

    • http://soeet.com ChrisATSo33t

      Even a 60% can not eclipse the nearly 400% jump of people’s emotional investing behavior. Go, go USA!!

  • Wow!

    This is really amazing. What’s even more striking is that someone leaked this rumor here on techcrunch among the comments several days back. I should have bought at 4.80!

  • Wow!

    This is really amazing. What’s even more striking is that someone leaked this rumor here on techcrunch among the comments several days back. I should have bought at 4.80!

  • http://soeet.com ChrisATSo33t

    Somebody should email Kevin Bailey @ Goldman Sachs with:

    ahhahahahahahahhahahahahhahh ahhahahahahahahhahahahahhahh
    ahhahahahahahahhahahahahhahh
    ahhahahahahahahhahahahahhahh
    ahhahahahahahahhahahahahhahh
    ahhahahahahahahhahahahahhahh

    IDIOT!

    • http://soeet.com ChrisATSo33t

      sorry, I meant David Bailey, I can never get his name right. For good reason.

      • Misery

        Unless IBM has been pitching him to drive down the Sun price and increase favorable terms for IBM…

  • http://soeet.com ChrisATSo33t

    Somebody should email Kevin Bailey @ Goldman Sachs with:

    ahhahahahahahahhahahahahhahh ahhahahahahahahhahahahahhahh
    ahhahahahahahahhahahahahhahh
    ahhahahahahahahhahahahahhahh
    ahhahahahahahahhahahahahhahh
    ahhahahahahahahhahahahahhahh

    IDIOT!

    • http://soeet.com ChrisATSo33t

      sorry, I meant David Bailey, I can never get his name right. For good reason.

      • Misery

        Unless IBM has been pitching him to drive down the Sun price and increase favorable terms for IBM…

  • jpg

    You know, that’s pretty cool that this was rumored here on TC. I wonder about how easy or difficult it would be to merge the two though. I mean, the sheer size of the two companies is enough to make any CEO dizzy just thinking about it. And the infrastructure, though somewhat similar, may be entirely different (don’t know, don’t work at either place right now, or for that matter, at all).

    But, can IBM truly make Sun more profitable than Sun could?

    • http://soeet.com ChrisATSo33t

      You can tell anything and everything that’s going to happen about a week or 2 before it does. It only effects people when it’s official.

      So if you do a bit of research, you can really do a good job predicting markets. I knew this was going to happen, and I sold in the 4s anyway because something even more crazy is going on right now.

      I gotta go to work, but keep in mind that if you troll around google groups and forums long enough you can separate the crap from reality. A lot of execs and knowledgeable people use Google groups under anonymity, and no you can’t be certain, but you can guess.

    • sundog

      IBM is buying Sun for the sw business and will most likely (imho) sell off most of the hw stuff. Now IBM will finally have control over JAVA which they have wanted for many years AND they get MySQL and the whole open source portfolio which will drive considerable revenues for the consulting business. So for Sun employees I think the HW folks are toast!

  • jpg

    You know, that’s pretty cool that this was rumored here on TC. I wonder about how easy or difficult it would be to merge the two though. I mean, the sheer size of the two companies is enough to make any CEO dizzy just thinking about it. And the infrastructure, though somewhat similar, may be entirely different (don’t know, don’t work at either place right now, or for that matter, at all).

    But, can IBM truly make Sun more profitable than Sun could?

    • http://soeet.com ChrisATSo33t

      You can tell anything and everything that’s going to happen about a week or 2 before it does. It only effects people when it’s official.

      So if you do a bit of research, you can really do a good job predicting markets. I knew this was going to happen, and I sold in the 4s anyway because something even more crazy is going on right now.

      I gotta go to work, but keep in mind that if you troll around google groups and forums long enough you can separate the crap from reality. A lot of execs and knowledgeable people use Google groups under anonymity, and no you can’t be certain, but you can guess.

    • sundog

      IBM is buying Sun for the sw business and will most likely (imho) sell off most of the hw stuff. Now IBM will finally have control over JAVA which they have wanted for many years AND they get MySQL and the whole open source portfolio which will drive considerable revenues for the consulting business. So for Sun employees I think the HW folks are toast!

  • http://www.azpowerball.net AZPowerball

    …good comments

  • http://www.azpowerball.net AZPowerball

    …good comments

  • http://myanmar-movie.net/pocle TheBest

    However, i like “can also play well with the public”. Ha

  • http://myanmar-movie.net/pocle TheBest

    However, i like “can also play well with the public”. Ha

  • http://www.pututik.com pututik

    Sorry if i am wrong, take my apologize. More better if Sun Micro get monetize support, because they build a lot of great software or tools. IBM, it just bussiness for them.

  • http://www.pututik.com pututik

    Sorry if i am wrong, take my apologize. More better if Sun Micro get monetize support, because they build a lot of great software or tools. IBM, it just bussiness for them.

  • http://creditcardmatcher.com Dave

    I wonder if IBM even has the long term financial flexibility to pull this kind of deal off? Or are they counting on SUN’s continual long term growth plans in order to pay for their own acquisition.

  • http://creditcardmatcher.com Dave

    I wonder if IBM even has the long term financial flexibility to pull this kind of deal off? Or are they counting on SUN’s continual long term growth plans in order to pay for their own acquisition.

  • http://techfilipino.com Francis Simisim

    great move Sun!

    TechFilipino

  • http://techfilipino.com Francis Simisim

    great move Sun!

    TechFilipino

  • http://www.twitter.com/bvmike Michael

    I truly believe this acquisition will happen. IBM is eliminating a competitor and picking up a great asset in MySQL. That is easily worth $4 billion.

    It is unfortunate that Sun Micro has 30,000+ employees getting the pink slip if this deal is finalized.

  • http://www.twitter.com/bvmike Michael

    I truly believe this acquisition will happen. IBM is eliminating a competitor and picking up a great asset in MySQL. That is easily worth $4 billion.

    It is unfortunate that Sun Micro has 30,000+ employees getting the pink slip if this deal is finalized.

  • http://smoothspan.wordpress.com/2009/03/18/sun-shareholders-and-jonathan-schwartz-take-the-money/ Sun Shareholders and Jonathan Schwartz: Take the Money! « SmoothSpan Blog

    […] smoothspan on March 18, 2009 IBM reportedly has an offer on the table to purchase Sun for $6.5B.  As Techcrunch puts it, “That is two quarters of revenues for Sun.  If you factor in the $2.6 billion in cash and […]

  • http://smoothspan.wordpress.com/2009/03/18/sun-shareholders-and-jonathan-schwartz-take-the-money/ Sun Shareholders and Jonathan Schwartz: Take the Money! « SmoothSpan Blog

    […] smoothspan on March 18, 2009 IBM reportedly has an offer on the table to purchase Sun for $6.5B.  As Techcrunch puts it, “That is two quarters of revenues for Sun.  If you factor in the $2.6 billion in cash and […]

  • http://www.twitter.com/bvmike Michael

    Update: Looks like IBM is going to pay between $10 and $11 per share. The deal will be finalized by the end of this week.

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