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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: Michael F. Donadio who wrote (35595)	9/20/2000 8:09:34 AM
From: Michael F. Donadio	Read Replies (2) \| Respond to of 64865

The NY Times on the Sunw acquisition: ================================================================================================ Sun Microsystems to Acquire Cobalt for $2 Billion in Stock By LAWRENCE M. FISHER nytimes.com AN FRANCISCO, Sept. 19 — Sun Microsystems Inc. said today that it had agreed to acquire Cobalt Networks Inc. in a stock swap valued about $2 billion. Cobalt, which is based in Mountain View, Calif., produces so-called Web appliances, which are relatively low- cost computers preconfigured and preloaded with software to perform specific tasks on the Internet. Acquiring Cobalt lets Sun address a fast-growing portion of the market that could not be reached readily with its own typically more expensive and more complex products. Cobalt also gives Sun a product line based on the Linux operating system and Intel microprocessor design. Sun shares gained $2.44, to close at $117.69, in Nasdaq trading. Cobalt shares rose nearly 40 percent, to close at $57.19, up $16.06. Cobalt went public in November and rode the enthusiasm for Internet and Linux stocks to a 52-week high of $172. Although Sun has been one of the fastest growing and most profitable technology companies in recent years, it has been perceived as vulnerable to an onslaught of inexpensive servers running the Microsoft Corporation's Windows 2000 operating system or Linux. Although Sun's own servers and its Solaris operating system are something of a gold standard on the Internet, they are neither inexpensive nor easy to use. Daniel Kunstler, an analyst with J. P. Morgan, said the Cobalt acquisition addressed that potential vulnerability head on. "This extends their reach and gets the product line below $1,000," he said. "I think we can stand up and applaud this one." Cobalt's core products include the Raq, a thin server typically bought by Internet service providers and used in stacks of as many as 40 machines, and the Qube, a small, desktop server designed for small to medium-size businesses or business units, which comes preloaded with software for Web access, e-mail management and file service. Primary competitors include the PowerApp line by Dell Computer for the Raq and the Interjet by I.B.M. for the Qube. The Raq and the Cube are both built using Intel-compatible microprocessors from Advanced Micro Devices Inc. "More and more users are aware of the appliances and how easy they are to use, and how much time and money can be saved in administration costs," said Pushan Rinnen, an analyst at Dataquest. "Sun is jumping to buy a good platform. Another distinct feature for Cobalt is they have over 1,500 developers doing applications solely for this platform." Sun said it believed that the Cobalt acquisition would be accretive, meaning that it would add to earnings before interest, taxes, depreciation and amortization, gains on the sale of equity investments and research and development charges for the second half of this fiscal year. In the first half of its fiscal year, which ended June 30, Cobalt had revenue of $28.3 million, nearly four times the $7.7 million it reported in the period a year earlier. Cobalt's net loss for the six months ended June 30 was $8.6 million. =============================================================================================== All the best, Michael