Oracle to layoff more than 10,000 Sun staff: analysts

Stan Beer
Tuesday, 21 April 2009 07:33

Business IT - Technology

However, TBR believes the industry trend is toward consolidation and creation of systems technology vendors – not separate hardware or software vendors.

If Oracle retains most of the Sun server and storage business as well as Java and Solaris, the company will be well-positioned to reshape the IT landscape through the creation of integrated datacenter appliances. One potential appliance would conjoin Sun servers, storage, Solaris and Java with Oracle database and Fusion middleware.

The resulting appliance would be unique to the IT industry and provide a single-vendor system solution that could threaten the hardware landscape and allow Oracle to rapidly penetrate the SMB market. Oracle could mix and match software (database, middleware and applications), hardware and storage as systems solutions – providing the “IT in a box” solution discussed by Oracle President Charles Phillips.

The TBR analysts say:

"Today’s announced acquisition of Sun Microsystems by Oracle for $9.50 per share, or $5.6 billion net of cash and debt, allows Oracle to remain the great white shark of the IT industry, driving growth through a voracious appetite for leading technology companies.

"Having depleted the industry waters of leading software vendors through the acquisitions of PeopleSoft, Siebel, Hyperion and BEA – as well as more than 40 smaller acquisitions since 2005 – Oracle was facing a business model crisis. The company was left trying to determine how to sustain inorganic growth rates, expand into new markets and gain the benefits of vertical integration.

"Then, the financial crisis depressed valuation to the point where vendors with cash (IBM, Oracle and HP) could consider acquisitions of larger vendors who were previously too expensive. IBM called the bottom of the market with its abortive takeover attempt of Sun, putting a price to the technology vendor.

"Additionally, IBM’s offer may have put a scare into Oracle; since Oracle has standardized its software stack on Java, it cannot afford to have one of its competitors own this crucial software building block.

"Additionally, IBM ownership of Solaris and the hardware installed base would threaten Oracle’s position in key industries such as communications, financial services, energy, automotive, aerospace, high technology and the public sector. TBR believes Oracle saw an opportunity to buy revenue at a fire-sale price ($0.42 for every dollar in Sun annual revenue) and consolidate its core technology and industries."