Sunday, March 27, 2011

Oracle's Sun Purchase: Grading the Results So Far

Dividend Growth Investor submits:

Oracle?s purchase of Sun Microsystems is a little more than a year old and the results thus far look decent overall. The problem: Quantifying Oracle?s success with Sun since the acquisition closed Jan. 27, 2010 is tricky.

Why is it so tricky? Oracle (ORCL) has melded software with hardware to sell integrated systems. The company has stopped selling many Sun boxes and nixed reseller agreements. Meanwhile, Sun has lost market share in the server market, according to IDC. Some of this share loss is by design, but it?s hard to discern what share losses are actually good for Oracle. What?s good market share loss versus bad?

Even Oracle?s operating profit goal for Sun is a bit murky. For instance, Oracle trumpeted that it was ?completely confident? that it will deliver $1.5 billion in operating profit from Sun by the end of the fiscal year at the end of May.

But


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