Oracle-Sun deal - Impact on India

Oracle’s acquisition of Sun Microsystems will create a $1.5-billion (Rs 7,474 crore) entity in India, and help Oracle compete more effectively with arch rival IBM by bundling its business software with Sun’s computer servers, and offering them at competitive rates to customers in the country. This transaction will help Oracle address newer segments of India’s $34 billion market (Forrester estimate) for IT products and services, and increase its share of the overall enterprise software services market. Customers, such as Punjab National Bank (PNB), which already uses hundreds of computer servers from Sun Microsystems and runs several applications through Oracle’s database software, this transaction will surely add value. “Since we have both Oracle and Sun as important vendors, this acquisition will bring a lot of value,” said RIS Sidhu, chief information officer (CIO) of PNB. According to Dataquest, Sun Microsystems India had revenues of Rs 1, 674 crore, while Oracle India’s revenues were estimated to be around Rs 5,800 crore last year.

Oracle buys Sun Microsystems

world's number two software company, Oracle Corporation, today agreed to buy hardware company provider Sun Microsystems for US$7.4 bn. in cash, pushing the software company into high-end computing system. "We expect this acquisition to be accretive to Oracle's earnings by at least 15 cents on a non-GAAP basis in the first full year after closing. The business will contribute over $1.5 billion to Oracle's non-GAAP operating profit in the first year, increasing to over $2 billion in the second year," Oracle President Safra Catz said in a statement. The deal comes a month after IBM abandoned its bid to buy Sun. Most analysts see the deal strengthening Oracle's position against IBM. "The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems," Oracle CEO Larry Ellison said. The impact of this acquisition in India, where both the companies are present for a long time, is not clear at the moment. An Oracle spokesperson said they do not comment on country-specific operations. Oracle is one of the largest multinational employers in India with more than 25,000 employees. Sun Microsystem has 1,200 people in India. Historically, Oracle has aways taken inorganic route to grow and expand its business. Enclosed exhibit details some of the largest acquisitions of Oracle.