Five months after its acquisition by Oracle, the axe continues to fall on employees at Sun Microsystems.
This is what CEO Larry Ellison had to say in January:
The truth is we’re actually hiring 2,000 people over the next few months to beef up these businesses, and that’s about twice as many people as we’ll be laying off.
Late on Friday, though, Oracle said it would add massively to the $325m of restructuring costs it had projected from the Sun integration. There will be an additional $675-825m of charges, with around 80 per cent of that apparently earmarked for employee severance costs. Read more
The FT’s editorial page takes issue with the EU Commission’s involvement in the Oracle / Sun deal:
The mere possibility that a $7.4bn technology merger in California might be blocked by regulators nearly half the world away over a fly-speck of a business shows how odd the dispute over Oracle’s proposed acquisition of Sun Microsystems has become.
Despite signs that the over-heated rhetoric is cooling down a bit, it’s too soon to predict a compromise in the transatlantic falling-out over Oracle’s plan to buy Sun.
European competition commissioner Neelie Kroes was more measured in her comments to reporters on Wednesday, suggesting that some sort of agreement might be possible that would protect competition in the database market and allow the dispute to blow over. That certainly sounded less punchy than her own spokesman’s attack on Oracle earlier in the week as “facile and superficial”. Read more
Things at Sun Microsystems do not seem to be quite as bad as Larry Ellison has been suggesting.
The Oracle boss said in late September that Sun was losing $100m a month as European regulators put its $7.4bn acquisition on hold. Then, a month later, Sun announced plans to sack 3,000 workers – a move that was widely seen as having been caused by the European delay.
The latest quarterly figures from Sun, filed with the SEC on Friday, paint a slightly different picture. Read more
When it comes to deal-making, predicting what Larry Ellison will do next is never easy – which is just the way he wants it.
So what to make of the fact that Mr Ellison’s pursuit of Sun Microsystems has now reached a point few expected, with the European Commission close to drawing a line in the sand with a formal objection to the deal?
This doesn’t necessarily mean that Brussels will act to block it. But it does show that things have reached an impasse in Brussels, which at the very least means a longer delay – with further detrimental effects to Sun’s business.
Assuming neither side balks before the EC issues its objection, Mr Ellison now appears to have a number of options. Read more
How could an open source software project that we hear generates a modest 17m euros a year in Europe have held up a $7.4bn tech industry mega-merger ?
Unlikely as it sounds, Brussels has put the Oracle/Sun deal on hold while it takes a longer look at the fate of tiny MySQL, which Gartner reckons has a database market share of around half a percentage point.
Clearly, somewhere along the line Oracle has played its cards very badly. Read more
Speculation about a possible spin-off of Sun’s hardware business by Oracle may not be so wide of the mark after all. The reason: Oracle’s initial acquisition interest only extended to some of Sun’s software assets.
Also, HP spent months doing due diligence over a possible bid of its own but backed out at the last minute without ever submitting an offer, so there’s a chance of it emerging as a buyer should Oracle opt to shed any parts of Sun in future.
Those are some of the things to be gleaned from Sun’s detailed disclosure to the SEC today of the events leading up to its deal with Oracle (HP’s identity is not disclosed – it is mentioned in the filing only as “Party B”. But one person who had a ringside seat to the action has told us that HP was actively engaged for months, and that despite widespread speculation, Cisco never showed any serious interest.) Read more
The tech headlines this week have certainly been eye-catching.
Cisco, which in this downturn is still making a 60 per cent gross profit margin and operating profits of more than 20 per cent of revenues, is risking upsetting long-time allies like HP to get into servers – a business in rapid retreat where profits have collapsed.
Now comes news that IBM is in advanced talks to buy Sun, reversing its steady march away from the hardware business into more consistent and profitable software and services. This amounts to a big change in course: after focussing on small software acquisitions, Big Blue looks like it’s about to become a consolidator in Unix servers.
What is going on here? Read more