Sun Microsystems CEO Scott McNealy is disparaging a report that suggests an investment firm is planning a leveraged buyout of the server and software company.
McNealy
called the report a "totally unsubstantiated rumor" and part of a scheme to profit from a stock price boost.
BusinessWeek on Friday quoted an unnamed hedge fund manager as saying McNealy is considering taking Sun private with the aid of Silver Lake Partners, an investment firm that bought out Seagate Technology and eventually relaunched it as a publicly traded company. According to the BusinessWeek report, the manager foresees a price of $5 to $5.50 per share, well above $3.44 the stock closed at Thursday.
In an e-mail Friday, McNealy said the rumor is part of scheme to profit from an increase in Sun's stock price, which had risen 36 cents, or 11 percent, at 8 a.m. Pacific. The stock had traded higher earlier Friday.
"Why would a supposedly credible rag like BusinessWeek quote an anonymous hedge fund guy on a totally unsubstantiated rumor designed to spike the stock price?" McNealy said. "I will bet this hedge guy is laughing his butt off that BusinessWeek printed this as he profits from the $0.42 rise in the price this morning."
Sun has stopped the deep revenue declines that plagued it for years after its fall from dot-com glory, but the Santa Clara, Calif.-based company still is suffering from mostly flat revenue and breakeven profitability.
The fact that McNealy is denying the rumor only adds credence to it veracity. If you've been around as long as I have, you've seen this pattern before: CEO vigorously denies a buyout rumor, and next week you find out that it's absolutely true.
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