Sun Microsystems shareholders have filed three separate class action lawsuits to block a $7.4 billion acquisition by Oracle, the company revealed in a 10-Q filing with the Securities and Exchange Commission. The lawsuits allege Sun’s board didn’t live up to its fiduciary responsibilities to shareholders when it accepted Oracle’s acquisition offer, saying “the consideration offered in the proposed transaction is unfair and inadequate.”
Sometimes, I wonder how greedy people are.
If choosing US$0.33 or US$0.00, people will often take a course of action that leads to zero.
How many times do workers strike for higher benefits or job security only to find that they no longer have jobs because of their own actions?
Of course, the union wins, and in this case, the lawyers will win but the company will likely go away and the shareholders will be left empty-handed.
Any union is all about what’s best for union management, and cares nothing about what might be best for the rank and file.
Yeah, let’s blame unions for something which they have nothing to do with. These are a few shareholders, most IT workers are not unionized.
Yeah, Unions are to blame for everything… from global warming to the actions of a few shareholders. WTF?
I think you’re a bit confused about what was said.
The shareholders, like workers, have an investment in the company and are expecting something in return. The thought that they would cut off their nose to spite their face doesn’t make sense. Unions often close down factories rather than accept a job that doesn’t pay as well.
Getting something back is always better than getting nothing, isn’t it?
Edited 2009-05-11 00:47 UTC
I guess the bail-out culture has reached shareholders who are powerful/motivated enough to get involved with big class-action lawsuits and yet weren’t as bothered to either influence the running of a company or to dispose of their holdings at the right time.
The fair solution: swap their shares for bank shares!
did you ever think they may merely be tools of IBM seeking to insert a fly into the ointment?
It’s not a done deal yet, which is why Larry is talking softly. The execs think they have got the cushy number they wanted but the shareholders and investors are not satisfied. However, either something happens or Sun cannot continue as it is.
Edited 2009-05-09 00:23 UTC
Are they aware that a healthy chunk of Sun’s technologies are open source? Including some of their chip designs.
If they make Larry Ellison back off, Oracle can wait for
Sun to tank, buy the pieces they want at fire-sale prices and cut hardware deals with Fujitsu.
It is amusing to me to see some of the ramblings from people with little to no connection or understanding with the subject at hand.
Here is the skinny: Oracle is offering to buy SUN for a tad under $8 billion. SUN has right now almost $4 billion in CASH (yeah, they were doing soooo bad right?), on top of that they have a crap load of assets both physical (take a stroll down any of the two mega campuses they have in Santa Clara and Palo Alto) and intellectual, never mind their customer base. Meaning that Oracle is getting something that is valued in more than $8 billion (stock price is not everything you know)… for a tad under $4 billion (since they will be getting the $3 billion cash from SUN as part of the acquisition).
That is the deal of the f*cking century if you ask me.
You’re conveniently overlooking Sun’s existing debt. Their cash on hand is $2.6B, but part of that will go to pay of the debt. The adjusted value of Oracle’s bid considering cash and debt, is $5.6B.
Sun has been on performance decline for some time now. Their operating margin in 2008 was 2.9%, they eeked out $400M profit on $13.9B revenue. In Q1 2009 alone, they had a net loss of $200M, and burned through $700M in cash. Nobody expects that performance to turn around any time soon.
Right now Sun’s book value is about $3.3B, and that is going down as they burn through cash. So the question is whether Oracle’s $2.4B premium over book value is reasonable considering performance and the value of intangible assets such as the customer base, brand name, IP etc. Unless somebody steps up with a higher offer, I’d suspect it is, since that value of an intangible asset ultimately amounts to whatever the highest price is somebody will pay. Sun’s shareholders may feel there is more value in the company, but the market feels otherwise, particularly judging from their share performance.
They would do well to remember what happened to Yahoo holding out for a better offer from MS; there is no other organization (perhaps short of Google) that would have the interest or access to capital for an acquisition, so it becomes inevitable that the organization will be ultimately valued less than the offer they declined. If the shareholders rebuff the Oracle deal, it’s not likely that somebody will step in with a higher offer. At Sun’s current bleed rate, the organization will be valued less in a couple of quarters from now, and would then become an even bigger “steal”.
From someone who had no idea at all that IBM was doing due diligence on Sun with respect to a takeover and refused to believe it, even when it had been specifically pointed out in an article for discussion, I find that funny.
elsewhere has done a good job of pointing out the reality of the situation. Costs are too high and they’re losing too much money for their cash pile and assets to mean anything.