Sun must ideally go back to the negotiating table with IBM; it will be tough for it to survive on its own
If they are still part of the game 8 years later, Sun Microsystem's shareholders deserve a special reward for their patience. Or may be they need to undergo a detailed medical check up to assess the level of their sanity. They have seen the company's management perform miraculous deeds in these years. A stock that traded at around $250 in those days of the dotcom boom now trades at a pathetic $6.42 (as on April 13). It isn't a cake walk to achieve such numbers!
Not that shareholders are always napping though. Sun's stock dropped by a precipitous 23% on April 6, when talks with IBM for acquisition of the company (for a price of around $7 billion) were reported to have collapsed. It shows that IBM was a hope that shareholders were desperately latching on to, a hope that seems to be fading away now. There are a few smiling faces of course; in companies like Intel, HP and Dell, which would have found the going tough if IBM would have successfully taken over Sun.
More interestingly, the old guard seems to have come back into the reckoning. Current CEO Jonathan Schwartz was apparently in support for the deal while the founder, previous CEO and current Chairman Scott McNealy was against it. Speculation is that Schwartz may exit from the company now. Schwartz seems to be on borrowed time already. His strategy to make the company lead in open source hasn't yet paid off, and this deal was a ray of hope for him too.
Sun and IBM had been in talks for holy matrimony for over three months now but it is being said that the deal has been called off because there were differences with regard to the settlement price and some other terms of the agreement. For instance, Sun was reportedly eager that IBM staunchly go ahead with the deal even if the regulatory challenge over monopoly charges gets stiffer. “The reason for this deal not materialising could be the result of IBM not getting blown away in the deal heat and making a prudent decision in these tough times,” informs technology analyst Rob Enderle. Many analysts feel that Sun is making the same mistake that Yahoo! made about 14 months ago. As a coincidence, founders played spoilsport in both instances.
If they are still part of the game 8 years later, Sun Microsystem's shareholders deserve a special reward for their patience. Or may be they need to undergo a detailed medical check up to assess the level of their sanity. They have seen the company's management perform miraculous deeds in these years. A stock that traded at around $250 in those days of the dotcom boom now trades at a pathetic $6.42 (as on April 13). It isn't a cake walk to achieve such numbers!
Not that shareholders are always napping though. Sun's stock dropped by a precipitous 23% on April 6, when talks with IBM for acquisition of the company (for a price of around $7 billion) were reported to have collapsed. It shows that IBM was a hope that shareholders were desperately latching on to, a hope that seems to be fading away now. There are a few smiling faces of course; in companies like Intel, HP and Dell, which would have found the going tough if IBM would have successfully taken over Sun.
More interestingly, the old guard seems to have come back into the reckoning. Current CEO Jonathan Schwartz was apparently in support for the deal while the founder, previous CEO and current Chairman Scott McNealy was against it. Speculation is that Schwartz may exit from the company now. Schwartz seems to be on borrowed time already. His strategy to make the company lead in open source hasn't yet paid off, and this deal was a ray of hope for him too.
Sun and IBM had been in talks for holy matrimony for over three months now but it is being said that the deal has been called off because there were differences with regard to the settlement price and some other terms of the agreement. For instance, Sun was reportedly eager that IBM staunchly go ahead with the deal even if the regulatory challenge over monopoly charges gets stiffer. “The reason for this deal not materialising could be the result of IBM not getting blown away in the deal heat and making a prudent decision in these tough times,” informs technology analyst Rob Enderle. Many analysts feel that Sun is making the same mistake that Yahoo! made about 14 months ago. As a coincidence, founders played spoilsport in both instances.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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