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August 28, 2009

Oracle to dispose of Sun hardware to HP: US report

Media speculation of break up and divest plan

By CBR Staff Writer

No sooner had reports confirmed Oracle has had US Department of Justice approval for its proposed acquisition of Sun Microsystems than the US media is suggesting the software company could be in the process of offloading to HP the hardware business that comes with the takeover.

According to a piece published by CNN, HP wants Sun’s hardware to boost its services business.

Market-watchers have been quick to point out that while HP does have the cash, there are big questions over whether such a break-up and disposal story would make sense. 

Blogging about what the hardware assets mean to Oracle, Jesse St Laurent at Corporate Technologies notes, “In the last 4 years, Oracle has acquired over 40 companies. It has built a complete software portfolio that allows them to compete effectively throughout the entire software stack. With the purchase of Sun, they will now own the bottom half of the datacenter stack. The operating system down to the disk drives.”

The hardware and support business is what generated revenue for Sun. The losses stem from Sun’s poor investment decisions.

Ellison himself has said that armed with both hardware and software, the company can build much better systems than if it only designs the software.

From the other side, analysts point out that in the most recent quarter, hardware sales were down 33%. If current sales are bad, future expectations could be no better.

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Seemingly, Sun’s design project covering its next-generation systems architecture has been cancelled, adding a good amount of uncertainty to the fear and doubt surrounding anyone considering purchasing Sun servers.


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