SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : All About Sun Microsystems
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Don Green who wrote (63883)6/1/2006 12:28:46 AM
From: Elroy   of 64865
 
I am curious about their break-up value. What does Sun have that anyone would be wiling to pay for?

You're kidding right? Sun has about ~$13 billion in annual sales at about 42% gross margin. IBM could have IBM salespeople sell those Sun products, get rid of all the Sun staff (what good are they anyway?) and IBM could probably deliver a 15% operating margin on the legacy Sun sales, and then migrate all those Sun customers to IBM equipment when its time for the "next generation server" to appear.

15% operating margin on $13 billion in sales is about $2 billion in operating profits, or $1.5 billion in net profits. Give those profits an IBM-like ~14x multiple, and that's about $16 billion in value, if IBM can execute that plan. Unfortunately, Sun's market cap is also $16 billion, so it sounds like a tough sell to IBM shareholders, unless my numbers are incorrect...
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News