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Technology Stocks : All About Sun Microsystems
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To: cfimx who wrote (63120)6/8/2005 4:19:05 PM
From: QwikSand  Read Replies (2) of 64865
 
I appreciate the detailed answer. But here's what I still don't understand. Sun paid all this money, more than they had to, for a profitable revenue stream. Okay. But an acquired company doesn't usually stay the same after an acquisition. If STK is left alone as a GENUINELY independent operating unit with no interference from never-ending internal Sun turf battles they could serve the purpose of profitable cash cow for some amount of time (maybe).

But most likely there are already political operators inside the top of the Sun management hierarchy who are sizing up STK like one of those butcher's diagrams, a cow to carve up to add to their empires. How much interference and how many high-level defections does it take before STK turns into a former cash cow? And how many acquisitions, of the many they have tried (though none of this magnitude) has Sun integrated successfully? It only takes one sales manager inside Sun who thinks STK sales guys might threaten his bonus, and the game's afoot. McNealy likes to let people fight it out gladiator style--survival of the fittest and all that. If that kind of thing goes on for a year or two, with no technological product impetus coming out of STK, they become just another bunch of bodies to be cut at the next rough patch.

And that doesn't even address the question of what effect the acquisition will have on STK's profitable revenue stream even if they ARE left alone and successfully integrated. Their customers may be used to buying from a marginal company, but now they're buying from a marginal piece of a marginal company.

So I still wonder: how long before the focus on STK moves from the income statement, where they're a profitable revenue stream, to the balance sheet, where their goodwill is an overvalued asset? Remember Cobalt.

--QS
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