labels: M&A, IT news
Sun Microsystems a takeover target: report news
23 August 2008

A depressing forecast and a declining share price could be an ideal opportunity for any technology majors like IBM, HP, Dell or Fujitsu to make a bid for Sun Microsystems, reports the San Jose Mercury News.

If a takeover does come about, than it could involve billions of dollars and spell the end for one of the most respected companies in the Silicon Valley, the report said,  quoting  analysts that an acquirer woud find definite value in taking over Sun, which has a reputation for pioneering workstations, servers and software and owns substantial intellectual property.

Founded in 1982, Sun is the seventh-largest company in Silicon Valley and reported annual sales of $13.9 billion.

Sun's profits slid to $88 million in second quarter 2008 from $329 million for the same quarter last year on revenues that declined to $3.78 billion from $3.84 billion last year, leading to takeover speculations.

The report qoted a Pacific Crest Securities analyst as having said that investors are unsure of the future of Sun Microsystems asking if it had become a "takeout candidate", while other analysts said  despite its Sun's low stock price, the company's technology, talent, customer base and brand still command respect in the industry.

Sun executive told the paper that the slowdown in the US economy had impacted the company more than its rivals as it sells big, expensive servers to corporate customers in the US financial and telecommunications sectors, which have been hit hard by the downturn.

Sun has projected a low single-digit in revenue growth for the next full fiscal year but does not expect any growth in US sales for the next six months.

According to a IT market research firm Gartner's report on server sales, even as IBM, Dell and HP had revenue increases for the second quarter, Sun experienced revenue declines (Table) 

Worldwide server vendor revenue estimates: 2Q08 (in US dollars)

Company

2Q08

Revenue

2Q08 Market Share (%)

2Q07

Revenue

2Q07 Market Share (%)

2Q07-2Q08 Growth (%)

IBM

4,315,049,933

31.2

3,870,937,408

29.6

11.5

Hewlett-Packard

3,811,555,998

27.6

3,703,108,934

28.4

2.9

Dell Inc.

1,795,295,686

13.0

1,561,405,756

12.0

15.0

Sun Microsystems

1,633,955,195

11.8

1,753,434,866

13.4

-6.8

Fujitsu/Fujitsu Siemens

492,821,856

3.6

493,498,046

3.8

-0.1

Other Vendors

1,761,944,639

12.8

1,678,799,374

12.9

5.0

Total

13,810,623,307

100.0

13,061,184,384

100.0

5.7

Source: Gartner (August 2008)

Dell nudges past Sun in worldwide Q2 server sales shipment Estimates, 2Q08 (Units)

Company

2Q08

Shipments

2Q08 Market Share (%)

2Q07

Shipments

2Q07 Market Share (%)

2Q07-2Q08 Growth (%)

Hewlett-Packard

706,724

30.2

650,371

31.2

8.7

Dell Inc.

577,163

24.7

464,650

22.3

24.2

IBM

308,835

13.2

295,088

14.1

4.7

Sun Microsystems

96,510

4.1

94,969

4.6

1.6

Fujitsu/Fujitsu Siemens

61,077

2.6

59,142

2.8

3.3

Other Vendors

590,732

25.2

522,442

25.0

13.1

Total

2,341,041

100.0

2,086,662

100.0

12.2

Source: Gartner (August 2008)

(See: IBM, HP maintain lead in worldwide Q2 server sales; Dell nudges past Sun to third spot)


 search domain-b
  go
 
Sun Microsystems a takeover target: report