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Latest on the IBM/Sun deal Comments Off on Latest on the IBM/Sun deal

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An updated story in the Wall Street Journal sheds some more light on the progress to the deal.

Apparently Sun’s board have rejected IBM’s offer – which I think is a sensible move. IBM asset-stripping Sun seems to be the most likely outcome of any deal.

More interesting is the news that Sun’s board is allegedly split, with Schwartz supporting a buy out, and McNealy opposing it. With the news that NcNealy is allegedly heading up a group that wants to take control of Sun and take it private, this is an interesting development.

Is Scott McNealy the right man to take the helm at Sun? Personally, although I think Sun’s management team are good, they lack experience with anything other than a growing company – and that shows with continued losses.

Arguably McNealy has a similar background – but he’s brought Sun through some tough times before, and potentially has the experience to steer Sun through the current problems. As I’ve mentioned before, he also has the mindset and investor confidence to support that.

The question is – what has McNealy been doing since he stepped down as CEO? He’s still Chairman of the Board, and he’s watched Sun continue to make big losses. Is he taking a long game plan to regain control, or is he as culpable as Sun’s current management team?

What future for Schwartz though? He’s been CEO for a few years now, and hasn’t managed to boost Sun’s fortunes. On top of that he’s overseen open-sourcing Sun’s crown jewels, and not following through with selling the support services around that. That’s a pretty major failing in execution.

With Schwartz pushing a deal that would see Sun swallowed whole by their main competitor, and with nothing else to offer investors and Sun’s customer base, I can’t see how he can continue as CEO. Likeable though he is, his position is now untenable, and with him backing a deal with IBM he’s showing Sun’s customers that he’s out of ideas and sees no future for the company.

I don’t believe that is the case at all, and I think he’s sending a very negative message. With IBM backing away I’m not sure he will retain his position for much longer.

Will Scott McNealy and Carl Icahn take Sun private? 1 comment

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I’ve speculated before about Sun taking itself private – it certainly has the capability to do so, even withstanding the dents to it’s balance sheet due to the questionable purchases of StorageTek and MySQL.

News comes from iNewswire that McNealy has resigned from his position at Sun to head up an investment team which will be launching a counter-bid for Sun.

With Paul Ottelini of Intel’s comments that Sun had been hawking itself around Silicon Valley, it’s clear that Jonathan Schwartz either:

  • sees no future for Sun as a stand-alone company
  • is trying to sell the company while he can recoup some value from it
  • has been pushed down this path by Sun investors who don’t understand IT or R&D (yes Southwestern Asset Management, I’m looking at you)

The last point seems the most likely – with the current economic conditions, many investment funds are desperate to recoup whatever cash they can in the short term, as investors panic and want to pull their money out or re-balance their portfolios.

If Scott and his team can follow through, this can only mean good news for Sun and it’s customer base. Like Steve Jobs at Apple, Scott has the narrow focus to push through his vision of how things should be done. Whether he can pull off the whole Jobsian Messiah thing remains to be seen, but I’d place far more credence in that happening than IBM doing anything other than asset stripping the company.

Have a read through the iNewswire release yourself and see what you think.

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