Sun Is a Star

1:00 PM -- With IBM Corp. (NYSE: IBM) out of the picture, Oracle Corp. (Nasdaq: ORCL) is buying Sun Microsystems Inc. for $9.50 per share, a 42 percent premium on Sun's closing price from last Friday. (See Oracle to Buy Sun.)

The deal is worth $7.4 billion -- and no, that's not a typo. Once Sun's cash is accounted for, the deal will actually cost Oracle $5.6 billion, though that is still... well, a very big price for, effectively, the Solaris server line, the MySQL database, and the Java programming language, even if Oracle does describe the latter as "the most important software Oracle has ever acquired."

It seems the valuation, and the potential combination of the Oracle corporate machine and Sun's hipsters, has left some investors somewhat shocked: Oracle's share price is down $0.40, or 2.1 percent, to $18.66 Monday lunchtime, though that's a recovery compared with earlier in the day.

Not surprisingly, Sun's stock has jumped a whopping $2.41, or 36 percent, to $9.11.

The news will be digested by just about every company in the IT and communications sectors, as the two companies' technologies are so widely deployed and relied upon, particularly by carriers and applications developers. One concern will be whether Sun's technology will, in future, come with Oracle strings attached.

Oracle has emerged as one of the big hitters in telecom software in recent years, adding to its role as a supplier of general business IT systems by acquiring telecom-specific software vendors such as MetaSolv, Portal, Hotsip, and Netsure, as well as BEA Systems. (See OSS Giants Shift Up a Gear, Oracle Flexes Its Muscle, and Oracle Buying Into Service Delivery .)

For more on the deal, check out this InformationWeek report.

— Ray Le Maistre, International News Editor, Light Reading

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