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Oracle enters hardware market with Sun acquisition
20 April, 2009
By Steve Wexler |
Oracle Corporation plans to shell out approximately $7.4 billion for Sun Microsystems, which will work out to $5.6 billion net of Sun's cash and debt, and will reshape the IT market. "The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems," said Oracle CEO Larry Ellison in a prepared statement. "Oracle will be the only company that can engineer an integrated system -- applications to disk -- where all the pieces fit and work together so customers do not have to do it themselves. Our customers benefit as their systems integration costs go down while system performance, reliability and security go up."
Sun Chairman Scott McNealy stated the combination is a natural evolution of our relationship and will be an industry-defining event. "Oracle and Sun have been industry pioneers and close partners for more than 20 years," he said.
Oracle president Safra Catz said the deal will be accretive to the company's earnings by at least 15 cents on a non-GAAP basis in the first full year after closing, ringing up over $1.5 billion to Oracle's non-GAAP operating profit in the first year, increasing to over $2 billion in the second year. "This would make the Sun acquisition more profitable in per share contribution in the first year than we had planned for the acquisitions of BEA, PeopleSoft and Siebel combined," he said.
Jonathan Schwartz, Sun's CEO, was equally enthusiastic, following the months of speculations that Sun was up for sale and last week's news that IBM was no longer in contention to buy the struggling vendor.
"This is a fantastic day for Sun's customers, developers, partners and employees across the globe, joining forces with the global leader in enterprise software to drive innovation and value across every aspect of the technology marketplace," he said. "From the Java platform touching nearly every business system on earth, powering billions of consumers on mobile handsets and consumer electronics, to the convergence of storage, networking and computing driven by the Solaris operating system and Sun's SPARC and x64 systems. Together with Oracle, we'll drive the innovation pipeline to create compelling value to our customer base and the marketplace."
According to Oracle, there are substantial long-term strategic customer advantages to owning two key Sun software assets: Java and Solaris. Java is one of the computer industry's best-known brands and most widely deployed technologies, and it is the most important software Oracle has ever acquired. Oracle Fusion Middleware, Oracle's fastest growing business, is built on top of Sun's Java language and software. The Sun Solaris operating system is the leading platform for the Oracle database, Oracle's largest business, and has been for a long time. With the acquisition of Sun, Oracle can optimize the Oracle database for some of the unique, high-end features of Solaris. Oracle is as committed as ever to Linux and other open platforms and will continue to support and enhance our strong industry partnerships.
"Sun is a pioneer in enterprise computing, and this combination recognizes the innovation and customer success the company has achieved. Our largest customers have been asking us to step up to a broader role to reduce complexity, risk and cost by delivering a highly optimized stack based on standards," said Oracle President Charles Phillips. "This transaction will preserve and enhance investments made by our customers, while we continue to work with our partners to provide customers with choice."
The Board of Directors of Sun Microsystems has unanimously approved the transaction. It is anticipated to close this summer, subject to Sun stockholder approval, certain regulatory approvals and customary closing conditions.
For more information, visit http://www.oracle.com/ and http://www.sun.com/. |
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