Thursday, September 07, 2006

Could Sun go the Way of Netscape?

I've been hearing a lot of rumors lately about Sun being the target of a takeover/sale/merger. The "Snapple" rumor (Sun merging with Apple) is back, partially rekindled by Eric Schmidt joining Apple's board. The latest wild one that I've heard for at least the second time is that Sun may be broken up and sold in parts a la Netscape. To summarize the Netscape deal, AOL got the Netscape web properties and Sun took the Netscape software portfolio. That didn't work out too bad for Sun. (How AOL faired is another matter.) I could imagine how Sun might be split up and sold to various competitors, but I really have to scratch my head and wonder why Sun's management and board would consider such an option. Things are looking up for Sun. I can't remember a more optimistic time at the company in recent memory. The offering portfolio in both hardware and software look great and I think Sun is doing well to keep their collective fingers on the pulse of the migration of key enterprise services to the cloud. They've been positioning themselves as arms dealers in the war to build out the infrastructure companies need that will offer services on the network. I think Sun has managed to make itself relevant again in the marketplace. Granted profitability is still lacking. Sun probably needs to cut some head count deep and fast instead of slowly like they have been recently. They've made some purchases but have been slow to win efficiencies by cutting redundant functions. So this is still a concern. I guess we'll have to see what next quarter brings. So what gives? Why break up now? My guess is this break up rumor probably doesn't have much of a basis in reality. However to quote a wise man, "That's just my opinion, and I could be wrong....".

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