Silicon Investor (SI) -- The First Internet Community

STOCKTALK

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 -- Ignore unavailable to you. Want to Upgrade?

To: MJ who wrote (62938)	4/28/2005 11:07:29 PM
From: QwikSand	Read Replies (2) \| Respond to of 64865

Sorry MJ, I was kidding in a sort of obnoxious way. In fact the $5.00 (or whatever it turns out to be, assuming this deal even happens) goes to the shareholders. In an LBO the management borrows the money to buy all the publicly traded stock from the shareholders so the company is no longer public. They (usually but not always) end up owing somebody a lot of money. They then have to get the company to operate profitably enough to both pay back a big debt and enhance its business at the same time. The decade of the 1980's is famous for a whole lot of deals like that. Most of them don't work...the company falls apart after the LBO because the manager-owners can't get profitable enough fast enough. The rationale in Sun's case seems to be that they already have a big percentage of the market cap in cash, so the debt won't be as large. That may be a risky rationale, because an LBO'd Sun will be perceived by customers as a very different animal. --QS