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| UPDATED: 2008-07-14 |
 Who Would Buy Sun? 
By: Savio Rodrigues 2008-07-14 Ashlee Vance has an interesting article on the future prospects for Sun Microsystems now that its market cap is $7.7B. Sun needs to maintain at least a $10B market cap to remain a potential holding of large cap funds. If Suns market cap slips below $10B for too long, large cap funds holding Sun will have to sell and thereby cause a further drop in Suns market cap. With short interest growing from 25 million shares to 57 million shares over the past month, compared to a 3 months trading volume of 17 million, the sharks are definitely circling. On the other hand, Sun has over $2.5B of cash on hand which should allow them to ride out the storm. This is especially true when you consider free cash flow has ranged from $137 million to $467 million over the past year. (i.e. Sun is making more from operations than they are spending, so they wont burn through the $2.5B in cash just yet.) Ashlee suggests that Fujitsu would be a good candidate to merge with Sun. I wouldnt have considered Fujitsu. But Ashlee makes great points about the R&D culture of Fujitsu & worldwide reach and customer preference of the combined company. But what about the other leading IT players? Would any of them make a move for Sun? • IBM? Unlikely, there would be huge overlap in hardware and software product lines • Oracle? Unlikely, they wouldnt want to get into the lower margin hardware business, and there would be large overlap in software portfolios • Microsoft? Unlikely due to corporate culture, although the combined Java + .NET, Solaris + Windows, OSS + Proprietary would be pretty compelling from a customer choice standpoint • Accenture? Unlikely, they wouldnt want to be tied to one vendors hardware and software • Red Hat? Unlikely, too much overlap in the software product lines • HP? Maybe, there would definitely be overlap from a hardware standpoint, but the ability to drive Suns software into more shops via the new HP+EDS could be interesting; remember that HP has a history with open source, from Linux to products such as JBoss... In the end, my money is on Sun remaining independent. But, rumors of Sun seeking a replacement for Jonathan (as per Ashlees article) concern me enough not to put my money on any outcome. What about you? What do you think lies ahead for Sun? Comments Tag: Java, Sun Add to  Del.icio.us |  Digg |  Reddit |  Furl About the Author: Savio Rodrigues is a product manager with IBM's WebSphere Software division. He envisions a day when open source and traditional software live in harmony. This site contains Savio's personal views. IBM does not necessarily agree with the views expressed here. |
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