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Technology Stocks : All About Sun Microsystems
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To: Thomas Haegin who wrote (7562)2/6/1998 5:06:00 AM
From: Holger Johannsen  Read Replies (1) of 64865
 
Thomas and all,
after all the news and discussions about the Compaq/Digital deal I have to wonder what Sun will do next. I certainly agree that Sun will benefit in the short term of defecting Digital customers but what about the long term being a high end only manufacturer compared to IBM, HWP and CPQ. Shouldn't Sun go in bed with an enemy and thus broaden its customer base?
I'm asking seriously why a Dell/Sun merger is such a bad idea? Both companies obviously have some weak spots in their business models and face stiff competition from those larger companies. There is almost no product overlap between Dell and Sun. Dell could gain the service organization, it would finally have some products in the high end and would be a serious competitor in the business sector. Dell would also gain storage solutions from Sun and would have an alternative OS for its Intel based workstations and servers. Sun would be able to enter the Wintel camp big time, would have a new channel with the direct selling model available and could concentrate on their server and storage business without worrying on the low end (Darwin). Sun could put out Solaris on Dell's machines and thus go into direct competition with MS on Intel machines on a large scale. Both companies have solid balance sheets and a great management team.
The problems I see are the CEOs. Could anyone imagine Michael Dell and Scott in one building? And how about the sometimes religious behavior about technology at these two companies? Scott has already shown that he can be a pragmatic when he made the deal with Intel about Merced. Could he do this again?
Anyway,even Michael Dell now sees a threat in Compaq:
* DELL COMPUTER CORP boss Michael Dell conceded that a merger of
COMPAQ COMPUTER CORP and DIGITAL EQUIPMENT would make life more
challenging. But he told a news conference his rivals' move would
do little damage to his plans to hit the sector's number one slot
soon. He saw the fact that Compaq had gained about $2 billion of
PC revenue from its link-up with Digital as a challenge to his
prediction, but not an obstacle. Houston-based Compaq announced in
New York on January 26 that it had agreed to buy Digital in a deal
valued at $9.6 billion. (Reuters 07:07 PM ET 02/04/98) For the
full text story, see
infobeat.com

Now I can only look at such a merger from my point of view as an investor. Would anyone on the board with a better knowledge of the underlying technology comment on such an idea?
BTW, I just hope Sun does not spend its valuable resources on this financial black hole Netscape. I don't see any synergies coming from such a deal.

Thomas, Du scheinst ja bis tief in die Nacht zu arbeiten. Machst Du auch mal Pause ;-)
Holger
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