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IBM Withdraws $7B Offer For Sun Microsystems, Says NYT
suraj.sun points to a story in the New York Times indicating that the much-rumored merger (or purchase) that would have united Sun with IBM may have dissolved before it began. Excerpting: "I.B.M., after months of negotiations, withdrew its $7 billion bid for Sun Microsystems on Sunday, one day after Sun's board balked at a slightly reduced offer, according to a person close to the talks. The deal's collapse raises questions about Sun's next step, since the I.B.M. offer was far above the value of the Silicon Valley company's shares when news of the I.B.M. offer first surfaced last month. .. Since last year, Sun executives had been meeting with potential buyers. I.B.M. stepped up, seeing an opportunity to add to its large software business, acquire valuable researchers and consolidate the market for larger, so-called server computers that corporations use in their data centers. ... Now, Sun is free to pursue other suitors, including I.B.M. rivals like Hewlett-Packard and Cisco Systems. Cisco recently entered the market for server computers."
I hate to think about it, but a Cisco Sun merger might make sense. At least at first glance.
Think Deeply.
If Apple bought Sun, then they would be a very interesting Server-Desktop combo.
RFC2119
Sun has now made my list of the stupidest companies on the planet. This is the same stupidity that happened when Yahoo rejected Googles buyout offer. Message to CEO's: When you have someone offering you much more then your companies worth...you take it run and never look back. Especially with the bad economy.
"The difference between genius and stupidity is that genius has it's limits" - Albert Einstein
If they do... they might as well publish it and start using it in sales presentations. A 10% premium above current value was IBM's offer. How much more do they want?
There's no way Microsoft could buy a big competitor in this political climate. In case you hadn't noticed, there's a Democrat in the White House. Sun is the corporation behind the only viable competitors to .NET and MS Office, in addition to being a competitor in the server OS space and a provider of a consumer-oriented virtualization product. The only way Microsoft could benefit from buying Sun is the reduced competition, and that fact is too obvious to slip past the regulators.
To the contrary, I know a local company that deployed an IBM iSeries (previously AS/400) mainframe in their main office, serving two other locations connected via a metropolitan-area T1 line. The machine itself was pretty expensive, yet covered by a 5 or 10 year (can't remember) warranty. The machine would actually call a support technician out to the site whenever it detected an issue with itself, and this has kept their uptime at an astonishing rate, aided by a decent UPS and the hot-swappable hardware.
They've been doing this for many years, and even though their first IT technician whom set this up passed away long since, they've kept the same infrastructure for all these years and it hasn't failed them. They also do this to remain backward-compatible with the older mainframe tapes, which has proven successful. Even at the busiest times, the mainframe is only at 10% utilization, even though it is a pretty low-end model.
This has amazed me about IBM support, and since then I've always weighed IBM as a candidate in new networks, although many of them are too small size or budget-wise to deploy a mainframe. But this is the support I've come to associate IBM with, can't speak for their phone support although everyone seems to outsource to India for phone support these days (a problem I have frequently with Cisco). But this support with Sun's hardware running Linux for cheap was one thing I was longing for with this merger.
Here is a link to the Bloomberg news article. No registration or subscription required.
"The quality of life is determined by its activites."--Aristotle
Hardware.
SPARC would just die. In fact, I'm not sure what kind of acquisition SPARC could survive. Perhaps Cisco would keep it. IBM, Apple, and Microsoft and RedHat would certainly kill it.
What are the chances that IBM will try a hostile takeover instead?
Are rher more things to consider to that than the likelihood that they could get 51% of Sun shareholders to be willing to accept a near 100% mark up from pre-purchase rumor price?
Cause if that's all that it takes, in this market I think it would be easy to find that many people willing to take the money and run. And not even that many, since in my understanding IBM could already have secured 5%.
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$tar -xvf
The thing with OOo in particular is that most of the devs are Sun employees because the codebase is an extremely huge and confusing mess, so buying Sun out and firing all OOo devs would *seriously* hurt it as a project, perhaps not long-term but certainly short- and mid-term.
Java and Solaris not so much, Java is far too important to IBM to be affected, and I guess there'll always be geeky hackers willing to adopt and maintain any abandoned version of UNIX, moreso with Solaris' reputation. But a MS purchase of Sun would be very bad for OOo, that's for certain.
No problem is insoluble in all conceivable circumstances.
Interesting. Sad, too. Like so many dedicated workers who spend time after hours at work, you think IBM wouldn't penny pinch like that.
Sun used to have "donut days" in the 1990s/very early 2000s. One day a week, donuts and bagels would be provided for free across Sun's campuses. Then Ed Zander (Sun) killed it, claiming to have saved Sun over $800k a year.
Sun recently stopped supplying various drink supplies. Instead, they're working with a company called FLAVIA.
Sun recently added FLAVIA's Creation 400 drink systems to various break areas. It's a fantastic, tasty beverage system. Coffees, teas and wellness drinks are available--and the environment angle of their product line is fascinating to examine. Yes, Sun DOES recycle the drink packets, although more employees should use their own cups, not waste tons of paper cups as I witness on occasion.
Yes, I work for Sun. And yes, I feel the cancellation of the IBM deal is a sound one. Too many product overlaps. Too much risk of mass layoffs--which would critically wound Silicon Valley. And too low of an offer, regardless of other existing contracts. Sun has extraordinary IP. That alone should warrant a higher price. And I think IBM will mull that a bit longer before coming back with another offer. (That's my opinion, not fact.)
Hmmm? I believe there is not really such a thing as a "merger". There is always a buyer. A "merger" is declared to be nice.
C//
No. A buyout is Computer Associates famous for buying corporations for their IP/Products and canning the staff. This would have been a merger with overlapping departments [accounting and human resources] being purged to keep IBM's staff. Every staff member would be interviewed to explain their justification for existing in the corporate structure moving forward. There are staff purges in mergers, just nowhere near the same level as a buyout.
I only hope that someone company with good management buys them out. There are very few of those, but they do exist.
Sun could have OWNED the entire server side, the way Microsoft owns the desktop, if only they played their Java deck of cards as well as Microsoft is playing .NET. Young uns don't remember it now, but there was a time when Microsoft was scared shitless of Java, and rightfully so. You install a runtime and the OS sorta doesn't matter anymore - that goes to the core of their entire strategy and rips it apart.
The problem was (and is) that Sun's software strategy was sorta like a chicken running with its head cut off - it went from the web to embedded to desktop to servers and everywhere in between without getting particularly good at anything (at least not thanks to Sun's efforts - community saved their server story, but that's about it).
What they should have done is they should have absolutely nailed desktop and server, and done so in late 90's before their cash cow hardware and support business started drying up.
McNealy is single handedly responsible for Sun's demise. Instead of building Java platform into a formidable weapon that would let them take over the world pretty much, he spent much of the late 90's trying to screw with Microsoft, when it wasn't even seriously in the enterprise server business - Sun's core market.
There was NOTHING Microsoft could do to stave off Java except for two things: .NET).
1. Brain dead reliance on bytecode interpreter in early Java VMs (compare that to unconditional JIT on first call in
2. McNealy's preoccupation with secondary issues, like keeping Java pure on MS platform. What he should have been thinking of is how to make it BETTER than MS implementation. Microsoft VM blew the doors off Sun's own at the time, its UI controls looked native (they WERE native), it had much faster startup time. The situation with lack of portability would have rectified itself had Sun's stack been superior to Microsoft's - people would just develop for Sun's version and ship a JRE on CDs, no big deal.
The only thing I want from them (or whoever buys them in the end) at this point is release ZFS under GPL. It's seriously difficult to get me excited with anything computer related these days, and ZFS is one of those things I want really bad on my Linux boxes (I know there's FUSE version, but I want production quality code).
After they do that, they can just fold up the tent and go out of business. I wouldn't care.
IBM (and to a lesser extent, Sun) GET uptime. They understand what it takes to develop systems with uptime measured in more years than slashot has even existed... think DECADES and you are starting to get the idea.
For all the bluster about uptimes with Linux, it really isn't all that great about it. For example, if you really do have 1 year of uptime on a public-facing system, you are a bad admin because there have been a number of security bulletins over any given year's time w/ Linux.
The miracle of Linux is that the uptimes are as good as they are, as cheaply as it costs. It's damned impressive that you can sustain 3-4 nines of uptime with a system board purchased at pricewatch for 60 dollars, yet the numbers don't lie - this isn't unusual!
The real question is whether or not those 4 hours per year of downtime at 99.95% actually is worth the jump from a $2,500 dollar server to a $75,000 dollar server. (I have no idea what an AS/400 really costs)
The number of cases where the additional costs are really worth it is rare. Less is more, better is worse, etc....
I have no problem with your religion until you decide it's reason to deprive others of the truth.
buying Sun out and firing all OOo devs would *seriously* hurt it as a project
In that case, since Sun is taking the role of old yeller, we should start learning more about the source code so as to keep the project alive after Sun.
It struck me when I read this article at MSNBC
The stock price doubled since the initial rumors? Really...so who stands to benefit from this? Are Sun and IBM execs pals enough to hint at talks (without committing to any deal)
Understanding that IBM has invested quite a bit in java, I can see how they'd like to acquire Sun. However, it's a bit odd that they'd offer a significant premium (unconfirmed) and then bail on the possibility of another company getting to bid. Yeah, I can see how they'd not want to get into a bidding war over this, but I would've thought they'd retracted their offer as soon as a hint of the possibility of acquisition became news/gossip without something legally binding in place. This is IBM, they aren't known for bold initiatives, after all.
Something about this sounds off, regardless of the rest of this article's speculation on who would be a better Sun benefactor.
I'm sorry, I just don't believe you've EVER dealt with IBM support, including your rosy picture painted in your response below. IBM in general, has grown so large they don't know their head from their ass. I have SEVERAL companies who made the mistake of replacing their IT department with IGS "IBM Global Services". The customer has hardware NOT from IBM with phone-home support. It phones my company, we call the customer site, and it gets routed to IBM. IBM doesn't know where the hardware is, doesn't know who owns it, doesn't know who services it. The actual hardware replacement is done by IBM themselves, but the guy bringing the hardware doesn't know who the guy "operating" the machine is, so oftentimes they'll have catastrophic failures for no reason other than lack of co-ordination.
IBM would sell SPARC and POWER for maybe a year max, at which point SPARC would be EOL'd and EOS's as quickly as possible. Solaris would hit the junk bin nearly as quickly (they have AIX).
I'm not sure what you do for a living, but I'm guessing it's NOTHING in the enterprise. I've yet to meet anyone that does business with these two directly that are remotely excited at the idea of them merging.
Sun is like a mini-IBM: they have their own CPU architecture, their own UNIX, their own database software, etc. They both live and die on server sales and support. The major differences are, IBM is a much larger company, and IBM has already managed to build the services arm that Sun craves.
The problem is, no company (except IBM) wants to buy a mini-IBM, because it means a whole lot of effort to consolidate and streamline. So, if IBM won't buy Sun, Sun will have to slowly spin things off to make themselves attractive to a smaller buyer. The last time we saw this sort of thing happen, it was with the sale of DEC (another mini-IBM) in the 1990s. In the end, DEC had to be partitioned over several years - Oracle bought the database, Quantum bought the storage tech, and Compaq bought almost everything else. It was a mess, and very little of the old DEC survived the transistion intact.
Man is the animal that laughs.
And occasionally whores for Karma.