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Sun Buying StorageTek for $4.1B

Posted by Zonk on from the that's-a-lot-of-storage dept.

MarkEst1973 writes "Sun Microsystems Inc. is buying Storage Technology Corp. in a $4.1 billion cash deal, the companies announced Thursday. The acquisition answers lingering questions about what Sun would do with about $3.1 billion of balance sheet cash. StorageTek is a profitable company with $191 million in profit in '04 on $2.2bn in sales while Sun posted a loss last year (albeit a much smaller one than the year before)."

2 of 215 comments (clear)

  1. Re:Reverse acquisition? by Glock27 · · Score: 4, Interesting
    This strikes me as something close to an exit strategy by way of diversification for Sun.

    I don't think so.

    Their core server business is seriously erroding and under attack from all sides.

    Actually, its server business has grown the last couple of quarters. Plus, its Opteron line coupled with Solaris is a strong offering. Yahoo Finance shows Sun as profitable with a P/E of 19 right now...low for a tech company.

    This gives them potentially two things. First, a way to provide integrated product lines. Servers and storage are complementary businesses and I could see Sun offering tightly bundled turnkey installations. Second, this gets Sun a profit center to keep them afloat as they transition their business model.

    Transition its business model to what? Sun has always sold (and resold) storage solutions.

    Though it might not be advertised as such, this might be akin to a reverse acquisition since StorageTek is profitable and Sun isn't.

    Yahoo Finance shows Sun as profitable with a P/E of 19 right now...low for a tech company.

    It's interesting, though not surprising, that Sun had to pay cash. Their stock isn't worth much these days and no one is going to lend them money with a BB+ credit rating.

    Don't count Sun out yet...it employs many smart people.

    --
    Galileo: "The Earth revolves around the Sun!"
    Score: -1 100% Flamebait
  2. Re:Wait.... by Plutor · · Score: 3, Interesting

    Where I work, we're paying sub-$4k for single-unit dual-Opteron Sun servers, on top of which we're running Linux. On a simple performance-to-cost ratio, these are the best Linux servers out there. From an administration point of view, they are a pleasure to work with, and it's a downright transcendental experience when they fail. I love my SunFire v20zs.