is it really cheap or just comparatively cheap. Also, a good read:Sun and Inktomi Team to Invest In Digital Island, an Akamai Rival
The Wall Street Journal
Sun Microsystems Inc. and Inktomi Corp. agreed to invest $26 million in Digital Island Inc., a fast-growing provider of Internet hosting and other network services, as part of a broader partnership that appears aimed at checking Digital Island's chief rival, Akamai Technologies Inc., Cambridge, Mass.
Sun, of Palo Alto, Calif., will invest $20 million in Digital Island, with Inktomi, of Foster City, Calif., adding $6. In turn, Digital Island committed to buy as many as 5,000 computer servers from Sun, all equipped with Internet "caching" software from Inktomi, at a cost of as much as $150 million. Internet-caching software helps ease information congestion. Digital Island, of San Francisco, said Sun and Inktomi also agreed to assist in joint sales and marketing of Digital Island's services. Further details weren't available.
At 4 p.m. on the Nasdaq Stock Market, Digital Island was up $45.3125, or 65%, to $114.9375 on news of the announcement; Sun was up $6.4375, or 8.9%, to $78.4375, Inktomi was up $4.3125 to $168, and Akamai was up $15.50, or 6.9%, to $241.50.
With the Sun and Inktomi investments, Digital Island said it will be able to expand its hosting network to include more than 6,000 servers within three years from about 1,250 servers. The company's aggressive growth plans are aimed at building it into the chief competitor to high-flying Akamai, which boasts a network of about 1,700 servers and is beloved on Wall Street.
Both Digital Island and Akamai aim to streamline the process of hosting Internet "content" such as Web pages and electronic-commerce related data and services, for companies around the world. Both companies have built extensive networks of computer servers to make it possible for companies to run e-commerce and share data without running into Internet congestion that can slow response times and create bottlenecks in the flow of time-critical information.
That fast-growing area has been a hotbed of deal-making and rapidly rising stock prices. In October, for instance, Digital Island announced a merger then valued at $630 million with Sandpiper Networks Inc., which uses special software designed to prevent data congestion by allowing customers to simultaneously execute transactions while downloading data. The deal is valued at $3.15 billion. Inktomi was an investor in Sandpiper.
Akamai, meanwhile, struck a deal in September in which Microsoft Corp. invested $15 million in Akamai in exchange for Akamai's agreement to integrate Microsoft software into its operations. As a result of the deal, Akamai agreed to use Microsoft's Windows NT operating system on some of its servers. Prior to the Microsoft investment, Akamai had relied solely on the free Linux operating system, one of several threats to Microsoft's dominance of operating-system software.
Tim Dwyer, a Sun vice president in charge of sales and marketing for network-service providers, said the Digital Island deal was designed to ensure that Sun hardware and software technology continues to thrive in the Internet contenthosting business. "We want to make sure we're in that space, and not locked out of the last mile," he said.
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