Update: Oracle buying Sun in $7.4B deal
Ellison said that Oracle tends to integrate acquired companies very quickly into the existing organization, and will do the same with Sun once the deal closes. The deal is subject to regulatory and shareholder approval.
Oracle said the Sun deal should bring the company more revenue in the first year than the company planned for its acquisitions of BEA Systems, PeopleSoft and Siebel combined. Sun should contribute $1.5 billion to Oracle's non-GAAP operating profit in the first year, a number that will increase to more than $2 billion in the second year, the company said.
For Sun, the deal will bring an end to CEO Jonathan Schwartz's efforts to turn the struggling company around. Sun's sales have been declining since their peak during the dot-com boom, as customers turned away from its pricey Unix servers in favor of x86 systems. Sun's share price has also fallen sharply.
Efforts to attract new customers with open-source software, and Sun's belated decision to enter the x86 market, have not paid off fast enough to give it the boost it needs.
With Sun on board, Oracle now will have to figure out how to navigate the server OS and hardware business. In addition to supporting Solaris for many years, Oracle also supports its software on Linux. Though Sun's hardware does not have the reach that its former suitor IBM's does, the deal gives Oracle a combined hardware/software business model more akin to IBM's, with which it now competes in the database market.
The deal comes after Sun reportedly walked away from an offer from IBM a few weeks ago. Those acquisition talks fell apart amid reports that the two sides had become "confrontational" over the prospective price. That deal, under IBM's last offer, would have been worth about $7 billion.Though there were rumors that Oracle might purchase Sun, it has never before had a hardware or server operating system business, a market in which a significant amount of Sun's assets are tied, so the deal seemed unlikely. However, Sun's Solaris has long been the leading hardware platform for Oracle's database business.
The two companies also have areas of common interest in their support for Java software, one of the only areas where their respective product lines overlap. Sun has an open-source Java application server called GlassFish that Oracle likely will hold onto, although the fate of Sun's other commercial Java software, the Java Enterprise System (JES), is unknown.
Oracle also had overlap in this area when it purchased BEA last year, but BEA's WebLogic software had a significant installed base, and Oracle kept the product alive. Sun's JES installed base is smaller, so Oracle may choose not to keep it.
James Niccolai of the IDG News Service and Computerworld's Ken Mingis contributed to this report.
Oracle buys Sun
- Oracle buying Sun in $7.4B deal
- Analysts: Sun's MySQL could thrive under Oracle ownership
- OpenSolaris, Linux could merge under Oracle
- Steven J. Vaughan-Nichols: The five biggest changes out of Sun/Oracle
- Don Tennant: Sun deal revives Oracle's Network Computer dream
- Can Oracle make sense of Sun's hardware?
- Oracle's Ellison praises Solaris, thumbs nose at IBM
- Sharon Machlis: What happens to MySQL?
- Seth Weintraub: No wonder Sun upped its price to IBM
Read more about Data Center in Computerworld's Data Center Topic Center.
- Workload Change: The 70 Percent of Your Business DevOps Forgot Adding WLA early in the development process ensures that the benefits of DevOps accrue for all applications, including your batch services. This paper...
- Oracle EBS and RAC Performance & Elasticity on Vblock™ Systems VCE Vblock™ Systems provide simple, low-risk solutions for migrating from a physical to virtual environment.
- Backup and Recovery of Oracle EBS on VCE Vblock™ Systems This solution architecture describes the key features and benefits of backup and recovery in the virtualized Oracle EBS on Vblock Systems with EMC...
- Zero Downtime Migration for Oracle EBS R12 with RAC on Vblock™ Systems The validation testing of a typical customer configuration outlined in this white paper, utilizes a virtualized Oracle EBS environment. The results illustrate that...
- Building Tomorrow's Data Center with Converged Technologies A number of forces are converging: the cloud, converged infrastructure, big data and fabric architectures to name a few.
- Responding to New SSL Cybersecurity Threat The featured Gartner research examines current strategies to address new SSL cybersecurity threats and vulnerabilities. All Data Center White Papers | Webcasts
Our new bimonthly Internet of Things newsletter helps you keep pace with the rapidly evolving technologies, trends and developments related to the IoT. Subscribe now and stay up to date!