Buying StorageTek: Sun's last big gamble?

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2005, though, and Canepa argues that data management is a fast-growing part of the computing industry. Sun said its own earnings will increase within 12 months as a result of the acquisition.

Neff estimated that, based on projections from analysts surveyed by First Call, StorageTek's net income will indeed rise and will likely reach about $200 million for this calendar year.

Risk tolerance
The buyout shows a tolerance for acquisition risk that hasn't been seen at the Santa Clara, Calif.-based company since its ill-fated Cobalt Networks purchase in 2000 for $2 billion in stock. Since then, Sun has mostly bought distressed properties--Tarantella's thin-client server software or Procom's storage operating system software, for example--or unproven start-ups such as Pirus Networks or CenterRun.

Risks are common now at Sun, however, with ambitious strategies such as open-source software, utility computing and servers with Advanced Micro Devices' Opteron. And McNealy said in 2003 that Sun wants to use its cash for more than just sending a signal that the company won't fade away any time soon.

No doubt Sun hopes this acquisition will fare better than past storage buys in its years-long push to penetrate the storage market. In addition to Pirus, whose technology has belatedly come to the market this year in the form of the StorEdge 6920, Sun has bought LSC Software, HighGround Systems and Encore.

Canepa argues that Sun's storage revenue problem stems from an anemic sales force, not from anemic technology. "The size of the business has struggled a bit, but not because of the product portfolio. One of the primary reasons we did this deal (is that) we just do not have enough feet on the street selling storage," he said.

StorageTek chiefly sells tape backup equipment and software to manage storage systems. Its future growth strategy, though, hinges on an idea called information lifecycle management, or ILM, technology that controls how files and e-mail are preserved and deleted over a period of years. It's a timely product, given corporations' difficulties tracking their burgeoning files and following new regulations that require they bring rigor to the task, but competitors such as EMC and Veritas also are active in the market.

That may sound like a bland product line, but Sun didn't have many alternatives, even when spending billions of dollars.

"If you're Sun, you'd want to do a 'Wow!' acquisition. But if you think

[Bob_Barker]

Analysts are harsh

"We would rather have seen the company buy back a billion shares and fire 10,000 people."

I guess someone has to put the "anal" in analyst though. What an ass.

[cheeseboy]

ass

Based on his asstute [sic] comments (share buybacks are only a temporary band-aid to prop up lagging share prices), Steve Fortuna is obviously much better at his job than the 10,000 Sun employees who he'd like to send to the unemployment line.

[Bob_Barker]

Analysts are harsh

"We would rather have seen the company buy back a billion shares and fire 10,000 people."

I guess someone has to put the "anal" in analyst though. What an ass.

[cheeseboy]

ass

Based on his asstute [sic] comments (share buybacks are only a temporary band-aid to prop up lagging share prices), Steve Fortuna is obviously much better at his job than the 10,000 Sun employees who he'd like to send to the unemployment line.

Some won't never understand Sun's mission

Analysts are one of these group of people. :-)

Sun needs storage because every big business (Suns main
market place) needs big storage. Now they have good machines
for the big business, good and nearly complete software stack
and a storage solution with a sales force which was successfull
in doing their job in that area. Good partners of Sun will have in
one moment a new are where they can sell solutions with Sun
technology - great deal from their point of view.

Have you read the last anaylst report? Service and storage sales
are growing, also inside SUNW. It was not the last big deal of
Sun, be sure. But it was also not the last stupid comment of
analysts.

Some won't never understand Sun's mission

Analysts are one of these group of people. :-)

Sun needs storage because every big business (Suns main
market place) needs big storage. Now they have good machines
for the big business, good and nearly complete software stack
and a storage solution with a sales force which was successfull
in doing their job in that area. Good partners of Sun will have in
one moment a new are where they can sell solutions with Sun
technology - great deal from their point of view.

Have you read the last anaylst report? Service and storage sales
are growing, also inside SUNW. It was not the last big deal of
Sun, be sure. But it was also not the last stupid comment of
analysts.

[furian]

Sun

is on the move, being squeezed by Linux offerings as well as the marketing gorilla MS who could sell reading glasses to the blind, after all look what they have done with Windows- made people computing illiterate and a boat load of cash for themselves. Fools and their money are soon parted and with MS we part with it over and over and....

[furian]

Sun

is on the move, being squeezed by Linux offerings as well as the marketing gorilla MS who could sell reading glasses to the blind, after all look what they have done with Windows- made people computing illiterate and a boat load of cash for themselves. Fools and their money are soon parted and with MS we part with it over and over and....