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IBM's loss is Oracle's gain

Sun has been shopping around for a buyer to help it turn around its falling profits and margins for a while. IBM and Sun were in talks over a potential deal -- IBM offered Sun $9.40 per share and the offer was met with resistance by Sun's board.

That resistance led IBM to walk away from the negotiations. The Wall Street Journal reports that Oracle has now agreed to purchase Sun for $9.50 per share. The value of the transaction is $5.6 billion and excludes Sun's cash debt. Sun reportedly had about $2.6 billion in cash and short-term investments and $700 million in long-term debt as of December 28, 2008.

A Sun/Oracle merger makes sense with Sun servers being sold with Oracle database software for a long time. Buying Sun will allow Oracle to offer complete solutions of hardware and software to businesses looking for a one-stop shop.

Other than the issue with IBM offering less than Sun's board wanted for the company, reports had IBM being concerned about antitrust issues stemming from the purchase. Oracle is believed to have less of an antitrust issue since it has fewer businesses that compete directly with Sun.

Oracle executives believe that the purchase will pay off quickly for the company despite the fact that Sun has been posting losses for the last three quarters. Sun is expected to add more than $1.5 billion to Oracles operating profit excluding charges and other items in the first year with that number growing to over $2 billion the second year after the purchase.

The Wall Street Journal reports that some analysts were stunned by the purchase. AMR Research analyst Bruce Richardson said, "The last thing you expected was a database-software company to buy a hardware customer base."  



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RE: A dime more a share...
By Taft12 on 4/20/2009 3:56:05 PM , Rating: 2
quote:
I wonder what is going to happen in regards to MySQL in the hands of Oracle.


The products have 2 completely different markets. MySQL will be a tremendously valuable foot-in-the-door when SMBs need to scale up their RDBMS.


RE: A dime more a share...
By omnicronx on 4/20/2009 4:33:35 PM , Rating: 2
MySQL is also very lightweight, and is perfect for webtier apps that do not do a lot of heavy lifting. Not to mention PHP and MySQL go hand and hand these days ;)


RE: A dime more a share...
By Netscorer on 4/20/2009 6:35:51 PM , Rating: 2
The only issue I see is that Oracle already has direct competitor to MySQL in Oracle Lite. There will be no incentive for them to support two lightweight database platforms when one is good enough.


RE: A dime more a share...
By omnicronx on 4/20/2009 6:49:47 PM , Rating: 2
MySql can't really be compared to Oracle lite. MySQL is used alongside oracle all the time, Google and Facebook do behind the scenes to name a few. Oracle lite is a stripped down version of oracle that lacks basic features thay MySQL has had for a very long time.


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