Business Tech

Come early December, Oracle will meet with European Commission regulators to urge their approval of its merger with Sun Microsystems. "Two people with knowledge of the matter" tell Reuters that "Oracle has asked for a hearing which has been fixed for December 10."

Should make for an interesting meeting given Oracle's refusal to take the EC's concerns about the future of Sun's MySQL database seriously. Certainly, it's difficult to imagine Oracle caving to the Commission's demands when it has criticized the group's findings as a "profound misunderstanding" of the database market and open source.

And if not that, then what? Would Oracle abandon the deal instead? That too seems unlikely because it would mean delaying CEO Larry Ellison's plan to transform Oracle into the next IBM. As Ellison said in October, "T. J. Watson's IBM was the greatest company in the history of enterprise in America because its combination of hardware and software was running most of the enterprises on the planet. We think with the combination of Sun technology and Oracle technology we can succeed and beat IBM. That's our goal."

Given the EC's concerns about the Sun acquisition and Oracle's refusal to address them, what other option is there?

Story Copyright (c) 2009 AllThingsD. All rights reserved.

Hewlett-Packard said Wednesday it plans to acquire 3Com, maker of network switching and routing products.

The deal is valued at $2.7 billion, or $7.90 per share. HP says the purchase is intended to boost its networking business, particularly in China, where most of 3Com's business is focused.

"By combining HP ProCurve offerings with 3Com's extensive set of solutions, we will enable customers to build a next-generation network infrastructure that supports customer needs from the edge of the network to the heart of the data center," Dave Donatelli, executive vice president and general manager of HP's Enterprise Servers and Networking business said in a statement.

3Com President and COO Ron Sege said he hoped that combining with HP's scale and large sales organization would allow him to get his products to more of the market quicker.

"I want to be able to grow faster...now we're going to have it," he said.

In addition to focusing on different geographic regions--half of 3Com's revenues last year came from its China operations--the two companies have little overlap in terms of products, which should make the integration of the two businesses simpler, Marius Haas, HP ProCurve Networking senior vice president and general manager, said Wednesday during a Webcast.

HP CEO Mark Hurd discusses his ambition to have a full 'stack' of IT technology at a Gartner conference in October.

(Credit: Stephen Shankland/CNET)

The 3Com deal is the most recent in a string of enterprise-related acquisitions HP has made in the past year, including most recently file serving software maker Ibrix. HP wants to be a leader in providing customers with an integrated stack of computing technology ranging from servers and storage at the foundation all the way up to services, Chairman and CEO Mark Hurd said at a Gartner conference in October. But to be competitive these days, a company has to fully commit to each element of the stack.

"You can't be in any one of them as a hobby," he said. "Compared to any competitor, you have to bring a combination of low cost and total cost of ownership, supported by innovation."

The 3Com buy should position HP in position to compete better with Cisco, the largest presence in the networking and routing market. In response to 3Com's acquisition by HP, Cisco released this statement: "While Cisco has a healthy respect for all of our competitors, acquisitions in our industry only validate the fact that networking is becoming the platform for all forms of communications and IT. As the leader in the networking market, Cisco is very confident in our business strategy, commitment to product innovation and ability to provide strategic business value to our customers in a highly competitive marketplace."

The 3Com deal is expected to close in the first half of 2010. HP stock barely registered the news, inching up 0.08 percent to $50 in after-hours trading Wednesday. 3Com's stock rose 5.18 percent to $5.69.

CNET News' Stephen Shankland contributed to this report.

This post was last updated at 3:40 p.m. PT with comments from 3Com and HP.

The proposed merger of Chartered Semiconductor Manufacturing and Globalfoundries will help the AMD manufacturing spinoff propel forward in its bid to become a foundry leader, according to analysts.

Earlier this week, Advanced Technology Investment Company (ATIC) and Chartered Semiconductor announced that they entered into a definitive agreement, in which ATIC would acquire Chartered for $1.75 billion. ATIC owns about two-thirds of Globalfoundries--the joint venture that the investment firm created with Advanced Micro Devices.

The deal is subject to Singapore's High Court and Chartered's shareholders, but according to market analyst iSuppli, chances are good the deal will go through.

In a statement, iSuppli said Chartered and Globalfoundries earned a combined revenue of $1.2 billion for the first half of 2009, which would propel it to No. 2 among pure-play foundry players. TSMC was the clear leader at $3.3 billion.

Globalfoundries revenue includes combined Chartered Semiconductor and Globalfoundries revenues for the first and second quarters of 2009.

(Credit: iSuppli)

The deal addresses a number of "glaring weaknesses" Globalfoundries has in service and its ability to produce in bulk, which the company had not been able to correct up till now. In particular, with the addition of Chartered, Globalfoundries would have two operational 300mm facilities and five 200mm ones.

"This acquisition provides Globalfoundries the ability to produce both bulk and silicon on insulator (SOI) technology," Len Jelinek, iSuppli's director and chief analyst for semiconductor manufacturing, said in the statement. "Prior to this, Globalfoundries could only manufacture SOI. But even of larger significance is that prior to the acquisition, the company was stuck doing things the way their largest customer --AMD--wanted.

"Now, they pick up the infrastructure that Chartered had in place and that's a major boon for them," he added.

Jim McGregor, chief technology strategist at In-Stat, said in a research note the potential merger was a "huge step" for Globalfoundries. He pointed out that the deal would deliver the third of three critical factors defined by In-Stat as vital to the foundry's long-term success.

The first two--gaining a significant customer and breaking ground on new capacity--had already been achieved. The third, becoming a part of the Common Platform manufacturing alliance.

"Gaining Chartered gives the company formal entree to the Common Platform alliance, which it was already loosely linked to through its relationships with IBM," McGregor explained. "This does assume that the transaction doesn't nullify the alliance or any contractual obligations, but we do not believe that it will because it actually adds more value to the Common Platform as an alternative to TSMC, the world's foundry powerhouse."

McGregor added that the fact that Globalfoundries had accomplished all three of these tasks in less than a year--"far quicker than In-Stat had predicted"--was "impressive" and drives the company "into a critical position in the market".

iSuppli added that the old foundry landscape was under duress, and that changes are fast-happening. UMC (United Microelectronics Corp.) could regain its second spot, with the expected completion of its acquisition of Hejin later in the year.

UMC did not respond to ZDNet Asia's request for comments by press time.

Chartered: Date for shareholder meeting not fixed
The date for a meeting by Chartered Semiconductor shareholders to vote on the sale of the company to Abu Dhabi's ATIC has not yet been set, according to a Chartered spokesperson.

The company, however, is targeting for the shareholders to congregate in November, she said in an e-mail.

According to a joint statement issued Sep. 7, ATIC and Chartered said that pending board approvals, Globalfoundries CEO Doug Grose would serve as chief executive of the combined operations. Chia Song Hwee, CEO of Chartered, would assume the role of chief operating officer and spearhead the integration effort.

The companies have just initiated the "integration planning process", the U.S.-based spokesperson added. Chartered has around 6,000 employees worldwide, with the "vast majority" based in Singapore. It has one 300mm facility and five 200mm fabs in the island-state.

Vivian Yeo of ZDNet Asia reported from Singapore.

Neelie Kroes

(Credit: European Commission)

IBM and Hewlett-Packard could not have planned it any better.

The European Union has launched an in-depth investigation into Oracle's acquisition of Sun, potentially delaying the merger by several more months. In doing so, the EU is actually guaranteeing the demise of Sun's hardware business and gifting it to Sun's competitors by misunderstanding the deal's impact on open source, generally, and on MySQL, specifically.

If you haven't been paying attention, the delay on the merger due to U.S. and EU scrutiny has already resulted in two shockingly bad quarters from Sun. Many enterprise customers are already moving to competitors like IBM because of the uncertainty surrounding the future of Sun products, The Wall Street Journal reports.

Further delay will only compound the problem.

Unlike the U.S., which approved the deal, the EU's Competition Commissioner Neelie Kroes is concerned that Oracle's takeover of Sun will end up diminishing competition:

Systems (like MySQL) based on open-source software are increasingly emerging as viable alternatives to proprietary solutions. The Commission has to ensure that such alternatives would continue to be available.

The Commission doesn't have to. MySQL's open-source license already does. It's open source: even Oracle can't put the open-source genie back in the bottle once it has been released, as MySQL has, under the GNU General Public License.

Consider: some of the folks cheering loudest for the EU to clamp down on the proposed merger, like representatives from Monty Program, have already demonstrated Oracle's (and Sun's) lack of control over MySQL. Monty Program has created a significant fork, or derivative, of the MySQL database, and stands to gain much by the EU's obstructionism.

In delaying the merger, the EU isn't helping MySQL. It's helping its competitors, including Drizzle, OurDelta, MariaDB (Monty Program's fork), Percona, etc.

Competition within and around MySQL is alive and well, regardless of Oracle. After all, as former MySQL CEO Marten Mickos has been saying for years, MySQL has never really competed with Oracle, anyway. MySQL serves (and has helped to create) a very different market: the Web database market.

When asked in April if Oracle's bid for Sun would end up hurting MySQL, Mickos responded: "MySQL works for Web-based applications. Oracle is for older, legacy applications." The vast majority of Oracle's revenue comes from enterprise IT. The vast majority of MySQL's revenue comes from Web companies like Facebook, Google, etc.

MySQL and Oracle don't really compete. They live in two very different markets.

So, if anything, Oracle's acquisition of Sun helps it leverage MySQL into a market--the growing Web database market--that its own technology is ill-equipped to manage. It also gets a lower-cost product with which to bludgeon its real enemy, Microsoft, coupled with a greater footprint in the rising open-source developer community.

Open source is not the enemy in this deal. Microsoft is.

The EU, however, has made itself an enemy to Oracle, Sun, and MySQL by holding up the merger, a situation that will only get worse due to its glacial pace, as CIO.co.uk's editor Martin Veitch suggests. Customers are not the beneficiaries of its intervention: Sun's server competitors like IBM are.

Though the EU purports to be in tune with open source, its meddlesome muddling reveals a surprising ignorance of open source, and shows a complete disregard for MySQL's true market opportunity.

UPDATE @ 6:59 Pacific on 9/4/09: I solicited comment from Gartner vice president and Distinguished Analyst, Donald Feinberg, who had this to say:

The EU does not understand open source. This is clear by using DBMS (MySQL) to extend the deadline. It also is clear that this is an attempt to use MySQL as a cover-up to a political agenda. It is protectionism at its worst.

The EU is entering deep water here, water that it clearly does not adequately understand.

Follow me on Twitter @mjasay.

Sun Microsystems announced Thursday that the stockholders at its special meeting voted in favor of the merger agreement with Oracle.

Investors holding approximately 62 percent of all shares of Sun common stock voted yes to the deal under which Oracle will acquire Sun for $9.50 a share in cash, a total of $7.4 billion, or $5.6 billion net of Sun's cash and debt.

The acquisition still faces antitrust scrutiny by the U.S. Department of Justice over one sticking point on Java licensing. But Oracle is confident the merger will be completed by the end of the summer.

The global downturn has been hard on Sun, which is expecting lower sales and a net loss for its fiscal fourth quarter.

Oracle announced its intent to buy Sun on April 20. The announcement followed a lengthy series of talks and meetings between Sun and other suitors looking to pick up the company.

The stakes have been raised yet again in the ongoing saga to acquire storage vendor Data Domain.

EMC announced Monday that it has upped its bid for Data Domain to $33.50 per share in cash, a deal worth about $2.1 billion. The company said its all-cash offer is "clearly superior" to NetApp's proposal of $30 per share in cash and stock.

In a letter to Data Domain Chairman Aneel Bhusri, EMC further strengthened its claim by stating that it has removed all deal-protection provisions from the offer as a way of maximizing value for Data Domain stockholders. The company urged the Data Domain board to do the same.

"It was questionable agreeing to deal protections in your initial agreement with NetApp when you knew of our interest in acquiring the company," EMC CEO Joe Tucci said in his letter to Bhusri. "There is no basis for continuing with them now."

Unlike NetApp, EMC's proposal isn't subject to any financing, due diligence, or regulatory contingencies. EMC will use existing cash to pay for the transaction.

EMC also said it's ready to close the deal within two weeks--almost a month sooner than NetApp. The $33.50-per-share offers expires at midnight EDT on July 17.

"Over the past several weeks we've received strong support from many Data Domain stockholders and customers, validating our belief that EMC is Data Domain's best choice," Tucci said in a statement. "With regulatory requirements now fulfilled, and in light of the clearly superior proposal we submitted to Data Domain's Board of Directors today, we expect Data Domain to sign our definitive agreement that will deliver superior value in cash to the Data Domain stockholders in as little as two weeks."

The skirmish to take over Data Domain has been playing out since May 20 with NetApp's original offer of $25 a share.

In early June, EMC jumped in and started a bidding war. In mid-June, two lawsuits were filed against Data Domain over its apparent reluctance to consider EMC's offer.

Speculation has also run rampant as to why EMC and NetApp are duking it out to win the hand of Data Domain.

This was originally posted at ZDNet's Between the Lines.

Sun Microsystems will reportedly be willing to resume takeover talks with IBM if Big Blue says it will commit to closing the deal.

Bloomberg reports the news based on two people familiar with the matter. The two companies currently aren't talking and each one is waiting for the other to make a move.

Gee, I wonder why Sun would be so willing to talk to IBM again...

(Credit: Yahoo Finance)

Fairly obvious, eh? But it's not all about the stock chart. There's another little problem: Sun doesn't have any other interested parties. Meanwhile, rivals are preparing campaigns to poach customers. See Dell's latest move--perfectly timed at the exact moment Sun announced its server refresh.

Update at 6:45 a.m. PDT: Wall Street doesn't appear to be buying into Sun's prospects. In early trading, Sun spiked, but then quickly retreated. It's one thing if Sun wants to talk. It's quite another if IBM wants to do so.

Update at 7:25 a.m. PDT: Updated stock information added and headline updated.

Sun Microsystems shares soared more than 10 percent in premarket trading on Thursday, following a Bloomberg report that the struggling hardware maker was interested in resuming merger talks with IBM.

Sun climbed nearly 10.8 percent to $6.79 a share in premarket trading. But as the markets opened for regular trading, Sun's shares settled back to a more modest uptick of 2.77 percent to $6.30 a share. The broader markets were mixed.

Either way, its stock remains a ways off from the $9.27 it reached when reports first surfaced it was in buyout talks with IBM.

Sun is reportedly expressing interest in resuming talks with IBM, if Big Blue will raise assurances that it can and will close the deal, according to Bloomberg.

Antitrust experts have previously noted that a Sun and IBM merger would likely face intense scrutiny by U.S. and European regulators.

IBM holds nearly 32 percent of the worldwide server market, based on 2008 factory revenue, and Sun has a 10.1 percent share, according to IDC. Combined, the two companies would account for nearly 42.1 percent of the overall $53.3 billion server market.

And if U.S. antitrust regulators, for example, express concerns over a deal, it could take six months to a year before they issue a final decision on whether to block a merger or let it go through, noted one antitrust attorney.

When companies are concerned their merger may ultimately face a tough time reaching closure, it's often reflected in a higher break-fee, noted the antitrust attorney.

"The price that a party demands for a break-up fee is known to kill deals," the attorney said.

That's because break-up fees can reach hundreds of millions of dollars.

Such was the case for prospective buyer EchoStar Communications back in 2002. The satellite TV company , to Hughes Electronics, after federal antitrust regulators said they would block the $25.6 billion merger.

Shares of Sun Microsystems suffered a staggering jolt Monday, following reports that the hardware maker rejected IBM's formal bid over the weekend and Big Blue has withdrawn its offer.

Sun's stock plummeted nearly 23 percent to $6.68 a share in premarket trading, following reports in The New York Times and The Wall Street Journal that the company rejected a formal buyout bid of $9.40 a share or less, and terminated an exclusive negotiating agreement, prompting IBM to withdraw its offer.

Sun's shares closed at $8.49 a share during the regular trading session on Friday.

(Credit: Yahoo Finance)

The storage and server maker's stock, while significantly down, has not yet touched the $4.97 a share level it was trading at before reports of the merger talks first surfaced in mid-March.

Sun is expected to face further shareholder pressure, in light of the reported breakdown in talks, Toni Sacconaghi, an analyst with Sanford C. Bernstein, stated in a research report Monday morning.

Sacconaghi noted that Sun's shares averaged $4.47 a share in the three months prior to reports of the merger talks, meaning that IBM's offer of $9.40 a share was a 110 percent premium.

He further stated:

Given the size of the premium and the fact that Sun's board has presided over a decline in the company's stock price over the last eight years from over $250/share to less than $5 prior to the acquisition talks being leaked, we believe that (Sun) is likely to face significant shareholder unrest, similar to what occurred when Yahoo declined Microsoft's offer. We expect Sun to issue a public statement detailing its rationale.

In the Yahoo-Microsoft merger talks last year, Yahoo, which had been trading in the high teens before the offer, rejected Microsoft's $33 a share buyout offer. That brought the wrath of one of Yahoo's large investors, Carl Icahn, who launched a proxy fight to attempt to unseat Yahoo's board of directors with his own slate. The two parties eventually reached a settlement, with Icahn and two of his representatives receiving seats on Yahoo's board.

Potential backlash from failed Sun-IBM negotiations could distract Sun's management and board by forcing them to justify their rejection rather than focusing on their struggling business, Sacconaghi noted.

The emergence of IBM-Sun buyout talks during the last two week of March, the end of Sun's fiscal third quarter, could end up affecting Sun's earnings because up to 40 percent of Sun's revenue is generated in the last two weeks of a quarter, Sacconaghi stated.

He also noted that customers are likely to have lingering concerns about Sun's future. And the prospects of Sun finding another buyer do not look bright, Sacconaghi said, adding these comments about the company, which trades under the stock ticker "JAVA":

While press reports suggest that the fall-out in discussions may be attributable to brinkmanship, we do think that a collapse in the talks has considerably weakened Sun's hand, as we see no other likely suitors, and a considerably higher potential for weakened (fiscal year third quarter) results.

According to press reports and our contacts, JAVA approached most logical buyers several months ago, with IBM being the most interested. While we believe that HP makes the most sense given its cost focus, physical proximity to JAVA (leading to more facile facilities consolidation), and more complementary product lines (HP is not as strong as IBM in Unix), the company appears fully focused on its acquisition of EDS, and a coincident deal to acquire Sun may prove to be overly distracting. JAVA's higher end server product portfolio would be very complementary to Dell, but we believe that an acquisition would be too pricey and represent too hearty an integration challenge for Dell.

While Sun's shares tanked on reports that merger talks with IBM have broken down, shares of IBM were down just 1.88 percent to $100.30 a share in premarket trading Monday.