IBM CFO pooh-poohs Oracle-Sun deal

IBM CFO pooh-poohs Oracle-Sun deal

Summary: IBM CFO Mark Loughridge fielded the inevitable question about Oracle's acquisition of Sun Microsystems. Loughridge did the conference call equivalent of a shoulder shrug.

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IBM CFO Mark Loughridge fielded the inevitable question about Oracle's acquisition of Sun Microsystems. Loughridge did the conference call equivalent of a shoulder shrug. "What's really changed? I think nothing," said Loughridge. 

That take was quite a contrast to what Oracle chief Larry Ellison said earlier Monday. According to Ellison, Oracle's acquisition of Sun "transforms the IT industry."

Loughridge (right), speaking on the company's earnings conference call, said that IBM has been competing with Sun and Oracle for years and the only thing that will really change is the address for Sun. "We've been competing against them for some time and winning in the field," said Loughridge.

His big data point was that IBM's System p product line gained 4 points of market share in the first quarter. That line, which features AIX and Linux operating system servers, competes directly with Sun.  IBM also said that it gained share in branded middleware in a swipe at Oracle. 

The Big Blue CFO also noted that IBM has completed more than 100 acquisitions since 2000 and spent $20 billion on buying companies. "We generate substantial free cash flow and have a lot of flexibility" to spend on internal investments, dividends, share buybacks and acquisitions. 

Loughridge said that IBM had a "strong and very disciplined" process to evaluate acquisitions. You could interpret that to mean that the Sun deal didn't make the cut for IBM.

Topics: Oracle, Banking, Enterprise Software, IBM, Linux, Open Source, Operating Systems, Software

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9 comments
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  • Who had guts

    IBM was never going to put all the ticks in all the boxes..from the press point of view it was a take over to shut down a competitor.It was done on Gut feel by IBM, it was never going to be anything but market share grap.
    The Management consultant
  • Did you expect anything different?

    IBM are hardly likely to say "Oh dear, we really screwed up! Oracle plus Sun will be a really tough competitor!"

    That said, I think the whole Sun/IBM/Oracle (Apple?) saga is a total non-event. Who cares?
    Fred Fredrickson
  • RE: IBM CFO pooh-poohs Oracle-Sun deal

    Much of System p's increase in market share is for systems running Oracle directly replacing SPARC or HP-UX systems. That may change with Solaris and SPARC under the Oracle umbrella. Looking at IBM's Systems Technology revenue breakout, System p is the only thing which is not declining. I would think IBM is very afraid of this combination.
    meh130@...
  • RE: IBM CFO pooh-poohs Oracle-Sun deal

    I am an IBMer and part of WebSphere group. And I, like many other IBMers think IBM goofed big time with this. They gambled during the last stages of the negotiations thinking that Sun will go down just like Yahoo deal and will come back to IBM with a lower price.

    For Oracle, buying Sun was extremely strategic and I have been talking to everyone I know about this from last 10 years right after dot COM crash. With Sun, Oracle overnight becomes a BIG player like IBM and HP. They not only own bragging rights of Java and Sun's related app servers and other software but they also acquire state of the art Operating System (Solaris) and state of the art Sparc Servers. And this was probably the best time to buy for the value as they have invested heavily in Cloud computing and have significantly enhanced their product offering with GlassFish, MySQL and others.

    IBM CFO can say what he wants, but whoever bangled the Sun acquisition, should be fired immediately as they have allowed the creation of a HUGE and formidable competitor to IBM's middleware.

    THIS COULD PROVE VERY COSTLY IN FUTURE and I think we will all be looking back at this one day.
    msmgrd-jk
  • To IBM CFO

    Why you think the world was completely sad and disgusted just because hearing IBM buy SUN and get relaxed after assured Oracle will buy SUN. Also, IBM is like General Motors, don't talk about IBM profits too much or you will loose your governmental bonuses :D
    javababy
    • Ellison is now the benevolant grandfather

      Is it the the same kind of sadness and disgust the world felt during Ellison's hostile takeover of peoplesoft? Oh Wait, My bad. IBM wasn't doing a hostile takeover.

      Turd Furgeson
  • RE: IBM CFO pooh-poohs Oracle-Sun deal

    This is a Burger King strategy, let MacDonalds do all the expensive market
    research about where to set up a location, and then set up beside them. This was
    let IBM do all the bantering about the correct share price (asset value) and then
    buy out from under them.
    bigpicture
  • It would have been a bad move for IBM to acquire Sun

    Sun is good property and in the hands of Oracle, it will do well. Sun (and Oracle) already have their hands in the open source movement as well as Java and Eclipse.

    If IBM were to acquire Sun, it could be seen as a monopoly on Java similar to Microsoft's monopoly on .NET technology. It could have negatively impacted IBMs own systems.

    Obviously IBM can't say this, (and they can't say that they're glad that Oracle has Sun). Hence the CFO's response was completely predictable.

    The acquisition doesn't change a lot but it does set Oracle up as another major player (alongside IBM, Apple and Google) in the "war" against Microsoft.
    gavin.bollard@...
  • RE: IBM CFO pooh-poohs Oracle-Sun deal

    I dnt know what statistics say but off late in field IBM is fast loosing on x86 to HP (e.g all new HPCs and general purpose computing is on HP) and Unix to Sun.

    By acquiring sun they could have atleast assumed no price competition on high end server deals. They really screwed big time.....they say finance guys dnt understand technology.... i think the guy negotiating with Sun thought he is buying vegetables in weekend farmers market and not the company which created free office productivity tool, java and solaris.
    sandythemonger