Takeover speculation swirls round Sun Microsystems
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Shares in Sun Microsystems rose by a tenth yesterday amid rising speculation that the systems and software company will be subject to a takeover bid.
13 May 2003 Shares in Sun Microsystems rose 9% yesterday amid mounting speculation that the systems and software vendor could be subject to a takeover bid.
Sun's shares have risen by a quarter since the beginning of May as rumours have intensified that rivals are considering an offer. There are also suggestions that private equity groups are interested in taking a stake in the company. Sun declined to comment on the rumours.
Speculation heightened when Ed Zander, the company's former chief operating officer and president, announced he was joining Silver Lake Partners, a private equity firm that has been involved in a number of technology company restructuring deals. This would put Zander in a good position to find a buyer for Sun.
Despite its decline in revenues since the dot-com bubble burst in 2000, Sun's market capitalisation is still a sizeable $13.5 billion, which makes the possibility of it being acquired by a rival less likely. Hewlett-Packard, for one, is still digesting Compaq, while IBM is attempting to move away from proprietary hardware.
However, control of the intellectual property surrounding the Java programming environment might appeal to IBM.
In hardware, Sun has lost ground to rivals as organisations invest in cheaper, Intel-based systems running on the open source Linux operating system. Sun has been slow to recognise the potency of the Linux-on-Intel combination, focusing on proprietary servers and operating systems.
A report from analyst group Meta last week blasted Sun's strategy. It suggested that customers should think hard about the long-term future of Sun, likened it to Digital Equipment (DEC) and hinted that CEO Scott McNealy ought to be replaced.
"At this point, the only thing that will save Sun from becoming the next Digital Equipment is a near-death experience and a CEO from the outside," concluded the report.
