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SUN Microsystems Possible Spiral Death?

I have always thought that SUN Microsystems is a confused company. Their strategies are unclear and they always sent mixed messages to the industry. While Scott Mcnealy was CEO, he guarded Solaris and JAVA while launching Linux initiatives.

Today I read in Reuters and IT Business Edge that SUN Microsystems is trying to avoid failure by finding a Buyer and after they had cut a deal with their one-time mortal enemy in order to get some much needed cash. Sun shares have nose-dived 77 percent this year, more than double the decline in the Nasdaq Composite Index .IXIC, to around $4 per share, a 13-year low. The stock is down 98 percent since year 2000, the peak of the dot-com boom. On top of that, in October 2008 they reported a US$1.7 billion quarterly loss!!! This has created speculation that the firm will be sold. But for what price do you sell a company that is losing US$1.7 billion a quarter, in a Buyer’s market?

Sun is a very complex company that would be very difficult for those that have the money to integrate. Finding a buyer will be almost impossible.

In addition to HP, IBM and Dell, three technology bankers listed Cisco Systems Inc and Japan's Fujitsu Ltd, which already has a business partnership with Sun, as natural bidders. They spoke on condition of anonymity as they would vie for the business if Sun puts itself in play.

But these companies may not want to take on the challenge of integrating Sun, which has a market value of about $3 billion, given the turbulent economy.

Sun may have more luck splitting its hardware and software divisions and selling them separately, although valuing the parts may be a challenge because they are tightly linked. The odds don’t favor SUN surviving this at the moment. Certainly not intact, anyway. It is likely to be followed by others. So how do you choose who wins and who fails?

Good luck Jonathan Schwartz. I wished you guys have listened to your Clients during the dotCOM era and launch a Linux strategy which could today be the force that is driving SUN and your other acquisitions.


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