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Archive for the ‘Sun Microsystems’ Category

Article from GigaOm.

For many years, Oracle and HP co-existed quite happily. They collaborated on the first Exadata in 2008, for example. Former HP CEOs Carly Fiorina, then Mark Hurd, keynoted at Oracle OpenWorld. HP appeared to have supplanted Sun Microsystems as Oracle’s hardware BFF for a while. Everything was copacetic.

Now the two companies are arch-rivals and are engaged in an increasingly bitter, seemingly personal battle, the latest skirmish of which saw a California Superior Court judge throw out a fraud claim Oracle lodged against HP. He also opened up court documents that don’t show either company in a particularly good light.

How did it all go so bad?

First, Oracle bought Sun for $7.4 billion in a deal completed in January 2010. That meant Oracle, for the first time was in the hardware business and its servers would compete with HP servers. That sealed the fate of the relationship going forward.

The public bad feeling erupted in August 2010 when HP canned Hurd as CEO, then hired former Oracle president Ray Lane (pictured above right) as chairman and Leo Apotheker, former CEO of SAP, as CEO. SAP is a huge rival to Oracle in enterprise apps and Lane left Oracle after a bumping heads with Oracle chairman Larry Ellison (pictured at right.) Things have just deteriorated ever since.

Here are some highlights (low lights) of the slap fight.

In a letter to the New York Times in August 2010, Ellison said HP’s firing of Hurd:

The H.P. board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago … That decision nearly destroyed Apple and would have if Steve hadn’t come back and saved them.”

HP’s server and storage chief Dave Donatelli blasted Oracle for discontinuing Itanium development at the HP partner conference in March 2010. Donatelli asked the couple thousand HP resellers in attendance to lobby Oracle to reverse it’s Itanium decision.
This is a shameless attempt to force customers to spend a lot of money to move to a platform over time that gives customers no benefits  … Oracle made this decision to slow Sun SPARC market losses.

Ray Lane calls out Hurd in his letter to The New York Times in October, 2010.

The bottom line is: Mr. Hurd violated the trust of the Board by repeatedly lying to them in the course of an investigation into his conduct. He violated numerous elements of HP’s Standards of Business Conduct and he demonstrated a serious lack of integrity and judgment
ut now in California District Court is just the latest in a  deterioration of a previously beneficial relationship between the two tech giants.

After Apotheker announced HP plans to buy Autonomy — another enterprise software company for $11.7 billion in August, Oracle couldn’t contain itself.

In a statement on September 28, 2011, Oracle said Autonomy had shopped itself to Oracle first and Oracle turned it down. When Autonomy CEO Mike Lynch denied that, Oracle said: “Either Mr. Lynch has a very poor memory or he’s lying.”

When there was further denial, Oracle put out another statement entitled “Another whopper from Autonomy CEO Mike Lynch” and helpfully published the PowerPoint slides it said he and banker Frank Quattrone brought to the meeting.  The presentation is here and here.

According to the statement:

Ably assisting Mike Lynch’s attempt to sell Autonomy to Oracle was Silicon Valley’s most famous shopper/seller of companies, the legendary investment banker Frank Quattrone.  After the sales pitch was over, Oracle refused to make an offer because Autonomy’s current market value of $6 billion was way too high.

The next chapter in this saga may be a trial on HP’s remaining claims against Oracle which should kick off in April, but stay tuned: anything can happen and usually does.”

Read original post here.

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Here is an interresting read from BusinessWeek.

For the mergers-and-acquisitions market, there is no doubt 2009 is ending better than it began. The year is winding up with a “sigh of relief,” says Morton Pierce, chairman of the M&A practice at law firm Dewey & LeBoeuf.

In the past month the M&A market has built up some momentum. According to Bloomberg, deals in North America were valued at $115.6 billion in November, the most since September 2008. Compare that with late 2008 and early 2009, when dealmaking either wasn’t happening at all or was centered in areas where deals absolutely needed to happen, such as failing financial institutions that needed buyers at any price. Deal volume in November was five times February’s volume of $22.5 billion.

Investors looking ahead to 2010 are wondering if this uptick in M&A can continue and where it will occur. Acquirers almost always buy at a premium, so traders can profit from correctly betting which industries will attract the most bidding activity.

Small Tech Deals

In 2009, Internet stocks, the investment and financial services industries, software, and oil and gas production were among the most active, according to Bloomberg data. Expect more dealmaking among technology stocks, say M&A experts. Oracle Corp. (ORCL) is battling European regulators to finish its $7.4 billion acquisition of Sun Microsystems (JAVA).

Such acquisitions, and especially much smaller deals, are a way of life for tech firms, says Daniel Mitz, a partner at law firm Jones Day who specializes in tech deals. “A lot of the innovation comes from smaller companies,” Mitz says. Dealmaking in tech slowed but didn’t stop during the downturn. There could be significant pent-up demand, Mitz says. “This is an industry that is ripe for M&A.”

One driver of a rebound for M&A in tech will be the strong financial positions of many tech firms, says Nadia Damouni, editor of dealReporter Americas, which tracks the M&A market. Another “cash rich” sector is health care, she says, but here the prospects for an M&A rebound are harder to read. The reason: Uncertainty surrounding the federal overhaul of the U.S.health-care system proposed by President Barack Obama and under discussion in Congress. “They’re at the whim of health-care reform,” Damouni says of the many insurers and health-care services companies that could be M&A targets at some point.

In health care, the key ingredient for dealmaking is “stability,” says Bob Filek, a partner at PricewaterhouseCoopers Transaction Services. If health-care reform passes—or even if it doesn’t—acquirers will want some certainty about what federal policy will mean for health care before making bids. Filek envisions “a couple of scenarios where [the result could be] a lot of M&A activity.”

Read the full article here.

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Oracle, Dell, Xerox and now HP – the high tech world as we knew it is changing fast. Companies that previously stood their ground and was seen as pillars of innovation are know swallowed into mega-companies that will challenge the marketplace with new services, products and offerings. Here is some selected tidbits from BusinessWeek in regards to the deal.

“Through its acquisition of networking gear maker 3Com, Hewlett-Packard will accelerate competition with Cisco Systems (CSCO), especially in China, practically overnight. Then comes the hard part. To make the most of the $2.7 billion deal, HP also needs to revitalize 3Com’s faded brand and persuade Western companies to take a chance on its products, designed largely in Asia.

Analysts were quick to see the logic in the planned acquisition, announced on Nov. 11. HP (HPQ) is attacking Cisco’s dominance of the market for gear that connects computers just as Cisco moves more aggressively into the market for computer systems, where HP is strong. Cisco on Nov. 3 struck a partnership with storage company EMC (EMC) and software company VMware (VMW) aimed atsupplying bundles of computers, storage, networking, and software.”

The article continues…

“HP’s bigger challenge in making the deal a success will be removing the tarnish that remains on the 3Com ‘s brand in the U.S. and Europe as a result of years of mismanagement. While 3Com’s data-center networking gear has about 35% of the Chinese market, it’s practically absent from the largest companies in the U.S. and Europe, analysts say.”

Read the full article here.

Other good resources for this topic include: Barrons, WSJ, 24/7 Wall St., Mashable & Techcrunch.

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We all know that mergers are not easy. Here is some news in regards to the Oracle/ Sun merger from Daily Finance.

“As expected, the E.U. raised objections to the Oracle (ORCL) buyout of Sun (JAVA) at about the same time that the Department of Justice approved the deal. The E.U.’s objection is based on the large market share that the two tech companies would have in the MySQL software business.

European authorities have been deviling American companies for years. In 2001 they killed the GE (GE) deal to purchase Honeywell (HON), which would have been the crowning achievement of Jack Welch’s tenure at the world’s largest conglomerate. The E.U. has troubled Microsoft (MSFT) and Intel (INTC) over antitrust concerns, and now it has brought up similar issues with Oracle’s plans.

The aggressive stance of the Europeans could threaten other deals in the works, starting with the planned joint venture in the search industry betweenYahoo! (YHOO) and Microsoft. Action on the merger could bring Google’s (GOOG) huge market share in the search industry under scrutiny. Even the Kraft (KFT) deal with Cadbury might be aggressively reviewed — if it ever happens. That transaction would give Kraft a huge portion of the gum and chocolate businesses in Europe.”

Read the full article here.

 

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Here is article from USA Today. As the crisis starts to ebb out, the downsizing has produced piles of cash at some companies.

“SAN FRANCISCO — There could be a thaw in the months-long stagnant market for tech mergers and acquisition.

Data-storage companies EMC (EMC) and NetApp are dueling to buy Data Domain for at least $1.8 billion. Last week, chipmaker Intel (INTC) said it would buy testing and development software maker Wind River Systems for $884 million.

The quarter’s big catch was when Oracle (ORCL) snapped up Sun Microsystems for $7.4 billion.

While hardly a buying spree, the uptick could signal a break for what has been a sluggish tech M&A market since the third quarter of last year.

So far, $17.9 billion has been spent on tech mergers in the U.S. in the current quarter — more than the previous two quarters combined, according to market researcher Thomson Reuters.

The activity reflects one byproduct of a sour economy: Big tech companies sitting on piles of cash are willing to spend some of it to aggressively pick up innovative start-ups as well as rivals with customers and market share.

The deals come at a time when venture capital funding is scarce for start-ups and there are scant initial public offerings.

“People historically make their money when they invest consistently, even during downturns,” says Keith Larson, vice president of Intel Capital, the company’s venture-capital arm. The company has said that it will spend $7 billion over two years to build advanced manufacturing facilities in the U.S.

“Almost the worst thing you can do is pull back during a downturn and miss out on buying opportunities,” Larson says. “We have a multiyear road map on the technology side.”

Cisco Systems CEO John Chambers, who has navigated the venerable network-equipment maker through several downturns, has said companies willing to take calculated risks often emerge stronger from recessions.

A few established companies with ample cash reserves this year have bolstered their war chests with the intention of snapping up companies.

Cisco (CSCO), which sold $4 billion in bonds in February, has about $33.5 billion in cash reserves. It acquired Pure Digital Technologies, maker of the popular Flip video camera, for $590 million.

“If you have cash, it is a good time to fortify product lines and fuel growth,” says Cynthia Ringo, managing partner for VC firm DBL Investors.

So far this quarter, there have been 239 deals in the U.S., including the Oracle-Sun blockbuster. In the first three months of this year, there were 313 deals.”

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Building on the trend of Apple, Nokia and others – Sun makes the move into a independent Appstore deployment. As Apple has shown that it is a viable business model, it only makes sense – end-users like to shop around, and are willing to pay for smaller apps. As Google Android starting to make its way into mobile phones, and Nokia “opened” up Symbian – the end-user community developer trend will create a business eco-system worth spending some research on. The project is codenamed Vector but will likely be called “Java Store” after its official launch.

Here is some quotes from Jonathan Schwartz by way of Washington Post.

“Candidate applications will be submitted via a simple web site, evaluated by Sun for safety and content, then presented under free or fee terms to the broad Java audience via our update mechanism. Over time, developers will bid for position on our storefront, and the relationships won’t be exclusive (as they have been for search). As with other app stores, Sun will charge for distribution – but unlike other app stores, whose audiences are tiny, measured in the millions or tens of millions, ours will have what we estimate to be approximately a billion users. That’s clearly a lot of traffic, and will position the Java App Store as having just about the world’s largest audience.”

“The store will be for all Java devices. Initially, the PC desktop will get the most attention from developers and customers, but there’s plenty of Java-enabled phones and developers will be pleased to have another distribution channel, especially one with the power of Sun behind it.”

Read the full article here. Read Jonathan Schwartz blog entry here.

Other bloggers covering this topic include: OStatic, Mobile Marketing Watch, Mobile Blogs, IndicThreads.

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After the deal with IBM feel through, Oracle did not wait long before aquiring Sun Microsystems. This article from San Jose Mercury News gives a throurough analysis. Here are some selected shorts from the story:

“Oracle will pay $9.50 per share for Sun’s stock, the two companies announced this morning. That is slightly higher than the price that IBM reportedly offered after lowering its bid in the days before those talks collapsed. The sale of Sun to Oracle means a powerful combination of two software giants, but also could represent a new direction for Oracle. It could potentially create a new force for competition in corporate datacenters, where companies like IBM, Hewlett-Packard and Cisco have been competing to offer a wide range of hardware and software products.”

In a joint conference call, Oracle president Safra Catz said the deal will add at least $1.5 billion in annual income to Oracle from the start. She stressed that the combined companies will be able to operate profitable and noted that Oracle has a track record of successfully integrating other large acquisitions in recent years, including BEA Systems, Seibel and PeopleSoft.”

Click here for more coverage on this issue: Peter Thomas, The IT Nerd, Bloggingstocks.

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