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.

IBM and Sun broke off acquisition talks

International Business Machines Corp and Sun Microsystems Inc broke off talks aimed at a $7 billion acquisition, the Wall Street Journal reported on Sunday. A Sun Microsystems sign is pictured at the company's headquarters in Santa Clara, California March 18, 2009. Talks between IBM and Sun were on the brink of collapse, threatening to undermine a potential $7 billion acquisition, according to the newspaper. More updates to follow

IBM in Talks to Buy Sun Micro Systems - deal likely to happen at US$6.5 bn

International Business Machines Corp. is in talks to buy Sun Microsystems Inc. in a combination that would bolster IBM's heft on the Internet, in data storage and in government and telecommunications areas, according to people familiar with the matter.

The two companies have a common interest in that both make computer systems for corporate customers that aren't reliant on Microsoft Corp.'s Windows software or Intel Corp.'s microprocessor technologies. The two companies are also strong supporters of open-source Linux and Java software for Web application development.

It is unclear whether the negotiations will result in a transaction, but if the deal does go through, IBM is likely to pay at least $6.5 billion in cash to acquire Sun, the people said. That would translate into a premium of about 100% over Sun's closing price Tuesday of $4.97 a share on the Nasdaq Stock Market.

People familiar with the matter cautioned that while talks are under way, a transaction might not occur. Ian Colley, a spokesman for IBM, declined to comment on questions about any talks with Sun.

Sun shares have plummeted over the past year, battered by the economy as well as competitors who have outpaced it in the competitive back-office computing market.
In recent months, Sun has approached a number of large tech companies in the hopes of being acquired, say people familiar with the matter. The world's largest tech company, Hewlett-Packard, declined the offer, says a person briefed on the matter. A spokesman for Dell Inc., the world's third-largest server maker, declined to comment.

The deal would bolster IBM's position as the world's largest server maker. According to analysis firm IDC, IBM had 31.4% of the market last year; H-P was second with 29.5%, and Dell third with 11.6%. Sun ranked fourth, at 10.6%.

In recent years, the market for servers has shifted from the huge, custom-built "mainframes" that IBM dominates to vast numbers of standardized computers. By pushing standardized servers, H-P has made inroads on IBM.