SiliconBeat

There’s been a lot of speculation about Oracle’s intentions in buying Sun Microsystems, and whether the highly successful software company really wants to keep Sun’s hardware business going. But Larry Ellison is insisting that’s exactly what he plans.

“If a company designs both hardware and software, it can build much better systems than if they only design the software. That’s why Apple’s iPhone is so much better than Microsoft phones,” the Oracle CEO told Reuters in an email interview. Oracle helpfully supplied a transcript in a regulatory filing with the SEC today.

Ellison’s comments amplify what he said when the $7.4 billion deal to buy Sun was announced last month. But at that time, he mostly talked about the value that he saw in Sun’s software, including Java and Solaris. While many took the deal as evidence that Oracle is now planning to sell a broad array of data center products, some skeptics have predicted Oracle would quickly unload Sun’s hardware segments — or at least the ones that have been unprofitable of late.

Oracle has only limited experience with hardware. Last year it introducted the Exadata storage appliance, which Oracle helped design and Hewlett Packard is manufacturing, using Intel chips. But Oracle said he plans to increase spending on Sun’s proprietary SPARC chips and “design advanced features into the SPARC microprocessor aimed at improving Oracle database performance.”

Ellison went on to say that he wants to keep Sun’s hardware engineers and also plans to keep selling Sun’s disk and tape storage systems, while designing new systems too.

Oh, and although those plans put Oracle in competition with HP, as well as IBM, Cisco and others, Ellison said he’s committed to Exadata and his company’s “excellent relationship with HP.”

“This is one of the toughest emails I’ve ever had to write.” Thus began this morning’s communique from Sun Microsystem’s Chief Executive Jonathan Schwartz to his troops. Fear not, though. With Dickensian flourish, Schwartz lifted up the tone of his email with his very next line: “It’s also one of the most hopeful about Sun’s future in the industry.”

Then follows a stirring paean to the 27-year old company whose board has signed off on the plan to be acquired by Oracle for $9.50 a share.

“I do not consider the announcement to be the end of the road, Read the rest of this entry »

Of all the big companies on the Silicon Valley landscape, the next 12 months is going to be particularly brutal for Sun Microsystems. Sun remains one of the 10 largest valley companies by sales. But unlike many of its broad-shouldered  neighbors, it has never really recovered from the dot-com bust.

Yes, there were a few profitable quarters along the way. But following the report last week that  the company posted a $1.67 billion loss in the most recent quarter, it appears there aren’t many options left. It did a reverse stock split. It’s been doing modest-sized acquisitions. It’s had multiple rounds of layoffs. And it changed leadership three years ago.

The result? Not good. The company is in a situation you never want to be in:

“With assets far exceeding its current valuation, investors stand to make modest gains if the company decides to break itself up, or if it finally succumbs to the takeover rumors circulating for years.”

Once investors start looking at the balance sheet, and looking at the stock price, bad things will happen. As Merc scribe Brandon Bailey reported last week:

“Analysts have been expecting Sun to announce significant moves to shore up its business, especially since a Tennessee investment firm recently disclosed that it bought a 21 percent stake in the company. Representatives of Southeastern Asset Management have expressed confidence in Schwartz, but said last week they planned to have discussions with Sun “and/or third parties” about improving the stock value.”

Last week, executives told analysts on a conference call that Sun is “evaluating actions aimed at returning to profitability.” Great. But haven’t they been doing that for about seven years now? Read the rest of this entry »

Sun Microsystems’ largest shareholder, Southeastern Asset Management, is evidently losing patience with the company. A day after the maker of servers and software announced that its results for the most recent quarter would be less than analysts had expected, Southeastern converted its reporting of Sun holdings from a 13G filing to a 13D, “in order to be more active in corporate governance and management matters, and to have the ability to enter into discussions with third parties concerning proposed corporate transactions of a significant nature.”

Southeastern also revealed Read the rest of this entry »

General counsels of several Silicon Valley corporations are in the vanguard of critics railing against changes being proposed by the Financial Accounting Standards Board “”that would force public companies to disclose more about the risks of litigation,” judging by the sources in this story by Zusha Elinson of the San Francisco Recorder.

“Under the revised rules for FASB Statement No. 5,” Elinson writes, “the threshold for reporting the potential loss from a lawsuit would be lowered from ‘probable’ to Read the rest of this entry »

Shares of Sun Microsystems shot up in after-hours trading Tuesday after the company reported that its fourth-quarter profit may have beaten analysts’ expectations. The shares were up 15 percent from where they ended regular trading on Tuesday, according to our Bloomberg box. If that holds up in regular trading on Wednesday it would make for the stock’s biggest one-day gain since Read the rest of this entry »