Comments on: Why an IBM purchase of Sun would make sense

Server market positioning and open-source resources, says ZDNet's Larry Dignan, are just a couple of the reasons to like a $6.5 billion takeover reportedly in the works.

[john-j-mclaughlin]

How could IBM afford this?
Buying Sun for $6.5b is not realistic when they have annual revenues of $13b. Most companies sell for a multiplier of revenue. A 3x multiplier would mean that $30+B could be required in cash or equity to buy Sun. A 0.5 multiplier when the company has cash on hand of about $3b, half the proposed buy-out price? I don't think so.

How many investors who bought Sun for more than $10/share will take this loss rather than holding on for the next wave?

By the way, what's IBM's cash/debit position?

On the other hand, stories like this make for great short selling ....

[martin1212]

Umm, most companies sell for a multiplier of revenue? Really? You think someone would buy GM for over $150 billion?? No, most companies sell for their perceived value, which has very little to do with their revenue. Look to the stock price for a more accurate reflection of perceived value. Up until this news story, that was around $4 billion. So it seems like a reasonable offer price.

[Renegade Knight]

@martin1212

Yes companies sell for a multiple of revenue. It's also true they sell for their percieved value (which as it happens is normally a multiple of revenue).

Sun's stock is down. Sun though is a viable company. Stock price doesn't always reflect a companys real worth. Merely the latest trend resulting from trading.

[tipoo_]

Buy out AMD instead, and make them 60% more epic.

[BtmnHatesRbn]

Sun has shares in Apple and Oracle and Google. None in IBM. IBM has no shares in Sun. This article is speculation, just like how GameSpot, another CNET (a CBS company, whose majority shares are owned by Viacom) website made a speculation report about Capcom making Marvel vs. Capcom HD for download, though there wasn't a product on hand, it was just speculation. Same goes for this story. IBM just laid off in 2007 300,000 workers, then in 2008 another 150,000 workers, and many smaller lay-offs since then. Also, other than one chain of stores in the Las Vegas area, and a ThinkPad I own that's a decade old, I don't see IBM's logo on anything anymore. In LA, I don't see 'em anywhere, and I go to many, many stores and businesses and offices, so what's going on? HP, Apple, and Sun seem the dominant at the businesses I see. Cluster farm for Zion Insurance is all Apple X Servers, Bank of America is all HP at the branches after ditching IBM's Merlin terminals and servers, and Sun inside the cluster farm...no, this article is pure speculation and should be treated as such. A "non-news" story.

[tgrenier]

Microsoft should by Sun and put the Windows GUI on top of Solaris. Or just by Solaris.

[bicparker]

You can't ignore Oracle in all of this. One thing worth noting with respect to databases... Sun Solaris servers run a lot of Oracle. Put another way, a lot of Oracle runs on Sun Solaris servers. And they have a large footprint in most major companies. This would represent a huge ingress into the commercial server backend should IBM buy Sun and keep the hardware.

MySQL is important, too, in its own way. But Oracle platforms are clearly in the center of IBM's target markets. Here is a way they could participate without competing head to head with Oracle versus their DB2 (at least initially).

[jonafc]

The dawning of the "SOLIX" O/S !!!!

[Gorbag]

Does this mean rumors of Sun buying Apple will finally end?

[tironside]

Wow just Wow.. IBM is 100 Billion a year in revenues.. but buying sun makes no sense on any level.. ibm has a far bigger hardware environment, bigger software better services. pretty much anything sun does, ibm does better... makes no sesne.. I smell stock manipulation

[jaipo]

java, java, java thats all IBM want.

[Commander_Spock]

A very good observation.... Re: "java, java, java thats all IBM want"

And, there goes the JAVAOS (IBM's OS/2 + Sun's Java) being an 800lb Gorilla in the "Cloud" Space!

[Renegade Knight]

Fair point. Java, OpenOffice and a few other holes that Sun can plug in IBM's product offerings.

[zvonr]

Impact of a Sun + IBM merger.

This deal will impact NetApp since IBM OEMs their products and will not make sense to do that anymore after the merger ....

This deal will impact Redhat too, since IBM would make more money selling Solaris than Linux on X86...

I see no major problems in AIX and Solaris integration, the future will be definitely be Solaris, and AIX customers need not to worry about migration since Solaris will have AIX Branded Zones to run their apps without any change... They could even brand the Power version as SolaiX :-)

This is a good deal for IBM if it goes through... The price is quite low, 0.5 times revenue, however another bidder could show up... or the deal might fall, it's not like IBM did not tried to purchase sun before ...

[adamopolis]

Does anyone else see this as more of a pre-preemptive move to stop one of IBMs competitors buying Sun at a bargain basement price? Accenture+Sun, HP+Sun, Cap Gemini+Sun would all represent much more serious competition to IBM in the high value technology and services space that IBM is trying to make its own.... Or consider the situation where Oracle buys Sun - gaining control of Java which is the foundation for most of its (and IBMs) software portfolio.....

[marap]

In my estimate, this deal would make sense in parts.
To begin with all this -- What is IBM lacking (to some extent) which its competition has a upper hand on ?
Hardware and OS(platform). Now please don't say that IBM is a hardware company and AIX is just brilliant.
We all know this, and the author also pointed out -- IBM is a software and services company.
With Sun, IBM will gain into its SMB clients and that's where IBM can sell its software and services.
Internal in IBM, this deal might cause strife between a SOLIX and a LINUX group, and they might do a balancing act on this.
SUN has been a shame on the name of opensource and Java. They just have it and don't do much productive. IBM can change that. IBM is a big player in moving Opensource and transforming it as a business, real business.
The deal will impact many -- RedHat, NetApp, Oracle, ... to name few.
And then there will be layoff's and we will see some golden parachute's tooo :) Funny none of this is mentioned anywhere.

[JCPayne]

Hmmm... Sun goes to IBM..... Another good combo would be Apple taking some of their soaring stock and buyout Dell.... Think of how much business customers they would have.... Esp. if they could slowly convert them over to Apple for good... Microsoft would be PISSED since Dell is one of their biggest clients...

[JCPayne]

Dell's stock is like $09.00 a share... . Apple's is like $101.00 a share right now... Apple buyout dell!!!! Then grab Yahoo and voilla instantly you'd be in the search engine business too and can compete against Microsoft in almost everyway.

[idfubar]

Pooling-of-interest acquisitions have been banned in the US since 2001... Nice dream though - maybe you can convince Apple to dilute common shareholder equity by issuing some shares or by taking on a massive amount of debt?