Comments on: Sun activist shareholder to get payday?

Southeastern Asset Management, which holds a 22 percent stake, said last fall that it would engage in talks with not only Sun's management but also third parties.

[dargon19888]

If the rumor is true, it would be a good deal for IBM.

On the hardware side, Rock chips would complement IBM's hardware and while hardware sales are down, its a cycle business. Sun hardware would also open the doors to 'white space' clients who typically shun IBM in the LUW (Linux/Unix/Windows) part of their business.

And thats the key. If IBM could convert these customers in to purchasing Sun hardware with IBM services and a combined software stack, IBM could recognize an ROI in the near future.

I would also expect to see Oracle consider bidding on Sun. While Oracle has stayed out of the hardware business, they would need it to stay competitive with IBM.

[idfubar]

Yahoo! Finance, we hardly knew ye...

(Nice chart, BTW)...

[ThisSunDontShine]

Ms. Kawamoto,
Your article is misleading and innacurate starting with the article title and continuing with the detail provided.

I would interpret the phrase "get a payday" as suggesting that Southeastern would make a profit on their Sun investment and their shareholder activism. Unless a Sun acquisition occurs at a HUGE premium to the 3/23/2009 Sun closing price of $7.94, Southeastern will in fact LOSE money on this investment. A brief explanation:

Southeastern began acquiring Sun stock about a year ago when Sun stock was in the high teens. Sun has dropped precipitously since then, touching an intraday low of $2.60 of 11/24/08. Southeastern kept buying and buying.

The following was reported in Southeastern's SEC filings disclosing their 22.3% ownership in Sun:

# of shares acquired: 166,048,623
Cost of acquired shares: $2,144,337,495

So the average cost per share = $12.91

So at current levels, Southeastern is LOSING $826 MILLION on their 22.3% Sun ownership.

At the rumored $10.50/share level, Southeastern would STILL LOSE $401 MILLION on their Sun ownership.

I do not consider either of these results to constitute a "payday".

In fact, Southeastern needs Sun stock to increase in value nearly 63% from current levels JUST TO BREAK EVEN on their investment.

Southeastern will need much more than a velvet glove to achieve these results - they need a financially irresponsible suitor. I doubt that IBM fits this description.