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

To: E_K_S who wrote (16496)	5/19/1999 7:49:00 PM
From: E_K_S	Respond to of 64865

Sun Micro Dispels Rumors Its Weighing Bid for Computer Sciences May 19, 1999 AUSTIN, Texas -(Dow Jones)- Sun Microsystems Inc. and analysts Wednesday downplayed rumors that the business-computer maker is interested in buying computer-services company Computer Sciences Corp. Such a deal would cause conflicts with other computer-services companies that Sun has entered into relationships with, a Sun spokesperson said. A Computer Sciences spokesman said the company wouldn't comment on the speculation, which gave Computer Sciences shares a boost Wednesday. In midday trading on the New York Stock Exchange, the shares (CSC) were up $4, or nearly 7%, to $63.063 on volume of 1.8 million shares, above the average daily volume of 982,480 shares. Wall Street analysts that follow Computer Sciences said they heard the speculation regarding Sun Microsystems from their respective securities firms' sales forces. Computer Sciences is an information-technology, consulting, and outsourcing giant. It participates in an estimated $310 billion world-wide market for computer outsourcing - one that is very fragmented and therefore should offer ample room for growth. In addition to its business computers, Sun (SUNW) is known for its Java software technology. Java is a computer language designed to create software programs that can run on any computer - a feature Sun likes to call "write once, run anywhere." Sun also has transformed itself from a maker of high-performance workstations into a leading maker of servers, the powerful computers that control big computer networks and help run Internet setups. Sun also has a joint venture with online giant America Online Inc. to integrate their so-called enterprise-software product lines. The alliance incorporates the enterprise-software divisions of Sun and the former Netscape Communications Corp., which AOL acquired earlier this year. S.G. Cowen analyst Richard Chu said the speculation surrounding Sun and Computer Sciences "doesn't make sense to me at all." Sun has an interest in partnering with a number of services companies, and buying Computer Sciences could close off such chances, he said. "It would go against our partnership mentality," said Andrew Casey, Sun's manager of investor relations. Sun already has a service relationship with Computer Sciences, as well as Electronic Data Systems Corp. (EDS), Andersen Consulting and PricewaterhouseCoopers, among other companies, he said. Analysts also noted that Computer Sciences has been a takeover target in the past. More than a year ago, it rebuffed Computer Associates International Inc.'s (CA) hostile $9.18 billion bid. "Computer Sciences doesn't want to be part of something else," said BT Alex. Brown Inc. analyst Ed Caso, noting that such a precedent was set during Computer Associates' play for the company. "It would be very much a surprise," he said. The rumor comes as continuing consolidation in the computer-services sector attracts heightened speculation. On Tuesday, Cambridge Technology Partners Inc. (CATP) jumped $4.375, or 28.1%, to $19.938, on speculation that it would be acquired. The company declined to comment. Separately Wednesday, Computer Sciences said it signed a $425 million contract to extend its deal until 2013 with St. Paul Cos.' Fidelity & Guaranty Life Insurance Co. unit. The agreement extends by five years Computer Sciences original contract with St. Paul (SPC), signed in November 1995, and boosts the total contract value to $540 million. Computer Sciences handles the insurance company's business operations, including insurance policy administration, new business processing, underwriting, customer service and management of information support infrastructures. Last week, the company received a 10-year, $1.2 billion contract to manage global information technology for Pratt & Whitney, the aerospace unit of United Technologies Corp. ===================================================================== I think SUNW should pursue a CSC merger as the combination would be a formable match to IBM's service group. I believe SUNW could work out any potential conflict with their other service partners but any merger must be a friendly combination. A SUNW merger would provide CSC a clear channel for integrating SUNW hardware and in-house software into their current customer contract bids. EKS