Analysts Unclear On Sun Micro Role In Any Netscape/AOL
Deal
By CHRISTOPHER GRIMES
Dow Jones Newswires
NEW YORK -- Analysts were scratching their heads about Sun Microsystems Inc.'s (SUNW)
possible involvement in acquisition talks between America Online Inc. (AOL) and Netscape
Communications Corp. (NSCP).
The Wall Street Journal reported Monday that AOL was close to making an all-stock offer for
Netscape; the two companies confirmed that they were in talks Monday morning. The paper said Sun
also might be involved, but that it was "unclear" whether a final deal would include the computer
hardware maker. Sun didn't respond to calls early Monday.
Could any arrangement with AOL-Netscape add to Sun's bottom line? Analysts said it's too early to
tell.
Jay Stevens, who follows Sun for Buckingham Research, said he had heard of the potential deal only
in press reports Monday morning.
"What I'm interested in is the revenue potential, the profit potential" for Sun, he said. At this point,
though, he said he "wasn't even sure how a deal would be structured."
Sun has more than a sympathetic interest in Netscape, which it once flirted with acquiring.
George Elling, an analyst at Lehman Brothers Inc., said it is clear that Sun has an interest in seeing
Netscape's Internet browser prosper, since it is written to be compatible with Sun's Java
programming language. In contrast, Microsoft Corp.'s (MSFT) Explorer browser isn't written in Sun's
version of Java.
Although Java is a relatively minuscule portion of Sun's business, the company clearly wants to see
the programming language become pervasive.
Sun "would like Java to be an important ingredient in products going forth," Elling said.
However, he said he didn't have a clear idea of how a deal would work.
Sun is also a vocal opponent of Microsoft, even though the two companies aren't direct competitors.
Sun's revenue primarily comes from selling large computer servers and workstations; Microsoft
mostly sells software for PCs. As Microsoft continues to scale into the higher echelons of computing,
the companies will likely compete more, however.
Both Sun and Netscape figure prominently in the government's antitrust case against Microsoft.
Scott McNealy, chief executive of Sun, is fond of rattling off anti-Microsoft "Top Ten Lists" every
time he gets near a microphone. Netscape, of course, has seen its dominant share of the Internet
browser market fall as Microsoft pushes its own Internet Explorer product.
Sun shares were recently up 3 15/16, or 5.8%, to 71 7/16 - past the 52-week high of 69 13/16 set
Wednesday - on Nasdaq volume of 5.9 million. Average daily volume is 6.4 million. |
