Oracle to Buy Sun

Oracle Corporation, a leader in database technology, announced this morning that it is buying Sun Microsystems. The transaction is priced at $9.50 in cash for each share of Sun Microsystems. This offer price from Oracle is 42% higher than last Friday's $6.69 closing price of Sun Microsystems.

It should be remembered that IBM wanted to buy Sun at $9.40 per share, but the deal fell through because of price issues and IBM's reluctance in the extent to which it will be involved in seeing the deal through anti trust reviews. It should also be remembered that any anti-trust reviews of IBM buying Sun will be much tougher, given that they are competitors in the hardware / server area and have a lot of overlap on the type of products they manufacture.

Oracle, on the other hand currently doesn't manufacture servers and has little overlap over the products of Sun Microsystems. Oracle is an unquestionable leader in the databases arena. Their databases power millions of businesses around the world. Oracle is well known for database performance, reliability and scalability. If one questions a database expert on the platform of choice for databases, they would almost always say that if it is small database in size, go with Microsoft Sql Server because of low cost, but if the database is critical and big and performance is a key consideration (as is the case with many of the business databases), then go with Oracle databases. While Oracle is the leader in databases, their middleware products don't currently generate as much revenue as their databases.

Oracle buying Sun Microsystems would actually give them full control of Java, a programming language invented by Sun, a programming language which powers millions of websites, mobile phones, etc. This would definitely enable Oracle to improve their middleware products to an extent that the middleware products may end up generating as much revenue as their databases in the years to come.

It should be remembered that a lot of businesses that use Oracle for their databases also use Sun servers as their hardware platform. Oracle buying Sun will give Oracle full control over the hardware platform that their databases run on. This will definitely enable Oracle to integrate their databases better with Sun servers very closely, thereby improving the reliability and performance of Oracle databases further (which already is the best in the industry).

It is a wise investment decision by Oracle that will go a long way in enhancing their leadership in the databases market further. It is also a wise investment, given that full control of Java will go a long way in helping Oracle enhance their middleware products, which currently doesn't generate as much revenue as their database productions. Larry Ellison, CEO of Oracle is right in calling Java the "single-most important software asset we have ever acquired"

Ref:

http://finance.yahoo.com/news/With-IBM-out-Oracle-jumps-in-apf-14971151.html?sec=topStories&pos=1&asset=&ccode=