STRATEGIC CORPORATE FINANCE; MERGERS AND ACQUISITIONS

Strategic Corporate Finance; Mergers and acquisitions

Mergers and acquisitions

ORACLE and SUN merger and Acquisition

With only the 'you may now kiss the bride' custom to follow, the ORACLE/SUN merger is now finally complete. After months of legal wrangling which has caused nothing but embarrassment and dwindled SUN's stature within the market sphere, reports also came out that half of Sun's 27,000 staff will be made redundant. Thus initial indications are clear that Oracle, known for its past agnosticism to open source has an eye for the merger being based on maximizing profit. In the meantime Sun's competitors are probably smiling wryly as the delay of the merger played into their immediate interests but what threats and challenges does this partnership now pose to the once great open source vendor which did so much for developing the tech and e-commerce industry.

One thing which Oracle will most probably do is address and remediate the main cause for Sun's tragic decline prior to the days when talk of 'takeovers' and 'falling stock shares' became the norm. In my humble opinion that was linked to Sun failing to consolidate on its strengths by audaciously venturing into unknown avenues only to find that it couldn't compete with the existent competition. By spreading itself too thinly the ambitious nature of the company soon led it into labyrinths it couldn't escape from. One such adventure was its acquisition of StorageTek.

StorageTek, known for their solid modular storage arrays and robust tape libraries had a decent reputation of their own prior to Sun's takeover. Data Center managers, IT Directors and their like knew they had solid products when they purchased the brand StorageTek but in a miscalculated maneuver, Sun decided to rename all their Storage products with the Sun Microsystems brand.

So what future does Oracle have in plan for Sun's current Storage portfolio? One certainty is that the OEM partnership with HDS' enterprise arrays will continue, but as for their own range of modular arrays the future doesn't look so promising. In a market with products such as EMC's Clariion, HDS' AMS range and ironically Larry Ellison's Pillar Data systems, the truth of the matter is that Sun's current modular range simply can't compete. As cost effective as they are, their performance and scalability were always limited in relation to their direct competitors, something that was already acknowledged by Sun prior to the takeover when ...