Sun Microsystems a takeover target: report

23 August 2008

A depressing forecast and a declining share price could be an ideal opportunity for any technology majors like IBM, HP, Dell or Fujitsu to make a bid for Sun Microsystems, reports the San Jose Mercury News.

If a takeover does come about, than it could involve billions of dollars and spell the end for one of the most respected companies in the Silicon Valley, the report said,  quoting  analysts that an acquirer woud find definite value in taking over Sun, which has a reputation for pioneering workstations, servers and software and owns substantial intellectual property.

Founded in 1982, Sun is the seventh-largest company in Silicon Valley and reported annual sales of $13.9 billion.

Sun's profits slid to $88 million in second quarter 2008 from $329 million for the same quarter last year on revenues that declined to $3.78 billion from $3.84 billion last year, leading to takeover speculations.

The report qoted a Pacific Crest Securities analyst as having said that investors are unsure of the future of Sun Microsystems asking if it had become a "takeout candidate", while other analysts said  despite its Sun's low stock price, the company's technology, talent, customer base and brand still command respect in the industry.

Sun executive told the paper that the slowdown in the US economy had impacted the company more than its rivals as it sells big, expensive servers to corporate customers in the US financial and telecommunications sectors, which have been hit hard by the downturn.