Sun: Our quarter stunk; Oracle: We'll get our accretive earnings anyway

Sun: Our quarter stunk; Oracle: We'll get our accretive earnings anyway

Summary: Sun Microsystems says its June quarter was horrible. Oracle contends that the Sun acquisition will be accretive to its operating profit---excluding all the bad stuff---in the first year after the deal closes.

SHARE:
TOPICS: Oracle, Banking
5

Sun Microsystems says its June quarter was horrible. Oracle contends that the Sun acquisition will be accretive to its operating profit---excluding all the bad stuff---in the first year after the deal closes. And Oracle's purchase of Sun closes soon. Something has got to give.

And that something is likely to be Sun's hardware business---or at least parts of it.

That's the only way the Sun math adds up for Oracle unless CEO Larry Ellison and his troops had already modeled Armageddon. Here's a look at the dueling statements.

Sun this morning said it sees a fourth quarter loss of 6 cents a share to 16 cents a share excluding items on revenue between $2.58 billion to $2.68 billion (Techmeme). The problem: Wall Street was expecting a loss of a penny a share on revenue of $3.03 billion. This shortfall was so material that a company that will soon be an Oracle subsidiary had to warn. Oracle quickly noted that the Sun acquisition will still boost earnings.

Now Sun didn't offer a lot of reasons for its miss, but all you need to know is that sales will be off more than $1 billion from the $3.78 billion a year ago. We knew things were bad at Sun, but this bad?

Possible reasons for Sun's unraveling:

  • Sun is distracted by the Oracle deal.
  • There's too much uncertainty about Sun to buy in a downturn.
  • IBM, Dell, EMC and HP are taking advantage of that uncertainty.
  • The Oracle deal is an excuse to accelerate trends already in place (Dell noted a lot of Unix to Linux transitions today).

In any case, Oracle isn't the type of company that misses projections so you can bet that it'll get its accretive earnings out of Sun. That means you can bet that some of Sun's unprofitable hardware lines---commodity storage and servers anyone?---will be offloaded in the not-too-distant future.

Sun shareholders will vote to approve the Oracle deal on July 16. Shareholders should count their blessings.

Also seeWhy Oracle bought Sun: 60% of enterprise software vendors rely on Java

Topics: Oracle, Banking

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

5 comments
Log in or register to join the discussion
  • Sun's acquisition by Oracle

    I agree with you Larry, Sun's hardware division has been a drain on Sun for 9 years. IBM's z-series and HP's superdome consolidation/virtualization has made centralization cost effective over server farm. While x86 units, took in a greater percentage of the low end server market.

    Oracle executives have continously repeated that the Sun acquisition would add $1B to their bottom line in the first year.

    The question will be, HOW.


    scotth_z
  • compaq

    I do hope that this will not be drawn out like the compaq deal which almost distroyed the brand.Sun staff and customers feel in limbo where there is no leadership from new Oracle management.This raises questions as to the ability of Oracle to handle post aquisition strategy.The good news is that Opensolaris is streaming ahead by a committed community.
    The Management consultant
  • RE: Sun: Our quarter stunk; Oracle: We'll get our accretive earnings anyway

    Another reason is Sun raised server prices in early 09. In one case we saw a 35% price increase for the exact same configuration we bought in Oct-Nov 08. So no surprise we stopped buying servers from Sun.
    NoSun
  • Poor sun.

    Poor sun. They try hard, even though SunOS (the unix clone known as solaris and opensolaris) is a headache for linux admins like me, I can't live without virtualbox, Oh well, SunOS users should either go to Fedora or SUSE. I love linux very much, and know much about it, but SunOS had too many things different and too many the same, and this caused me much confusion trying to remember the differences. It also had issues with easy hardware support for even the basics like a sound card. I personally like fedora for my PPC server, and on my normal use systems. It runs a cross between Yellow Dog Linux 5.0 and Fedora core 5, I installed yellow dog and ripped some files from my IBM Power's Fedora 5 install, and this monster was born, and eMac that makes it impossible to tell if you use Fedora or yellow dog. Be sure to leave X11, it can be useful for checking your email and writing posts like this. (I am using my eMac now). Once again poor sun, but they should have make it easier for linux admins.
    Subsentient
  • RE: Sun: Our quarter stunk; Oracle: We'll get our accretive earnings anyway

    You [url=http://www.2012-nflshop.com/]washington redskins jerseys[/url] esteem our own constructive material you can provide you with with the content pieces. [url=http://www.2012-nflshop.com/]redskins jerseys[/url] I am going to lesezeichen your web website as well as have the kids be sure to visit [url=http://www.2012-nflshop.com/]redskin jerseys[/url] in mid-air appropriate now commonly.
    makrekdw45-24353611923087901074498125825970