Rumor Patrol: HP May Buy Sun Hardware?
Fortune has a report that once Oracle closes on its deal to buy Sun Microsystsems, it will sell Sun’s hardware business to HP. Fortune’s Jon Fortt writes that “a person with knowledge of the communication between Oracle and HP suggested to me recently that Oracle still might deal those hardware assets to HP.”
Any sentence that includes the phrases “suggested” and “might” strikes me as pretty speculative. The chatter has since spilled onto financial blogs but doesn’t appear to have had a meaningful impact on the shares of any of the companies involved.
For what it’s worth, Oracle CEO Larry Ellison is on the record saying he intends to keep the Sun hardware business intact. “We are definitely not going to exit the hardware business,” Ellison said in May. ”While most hardware businesses are low-margin, companies like Apple and Cisco enjoy very high margins because they do a good job of designing their hardware and software to work together. If a company designs both hardware and software, it can build much better systems than if they only design the software. That’s why Apple’s iPhone is so much better than Microsoft phones.”
That hasn’t cooled persistent speculation that the hardware unit is for sale. In June The Register cited a source close to Oracle as saying that the company “has continued to shop Sun’s hardware business around to potential buyers” but was seeking an “unrealistic” price.
richPosted August 28th, 2009
HP needs less hardware and more software… 1/2 of Sun’s hardware is OEM’ed anyway… I say no way!
Paul RetlewskiPosted August 29th, 2009
What LE said was to protect an asset pure and simple. He had to show support for the decision to balance his (Oracle’s?) decision with the BOD as well as Sun’s customers/potential customers. The last thing LE would do is self depreciate a purchase that could hurt Oracle in the long run i.e. if Sun’s revenue drops substantially the value of the pieces goes down and hurts Oracles bottom line.
So LE did what any responsible ceo would do and talk up the acquisition to increase it’s piece value (something is more valuable if it is harder to obtain) and renew confidence in the customer arena that would support Sun’s revenue base and prevent huge swings. Must create the illusion of value and putting a high price on it sets a precedence that they hope to come close to in a future sale.
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