IBM
Oracle buys Sun – To Provide Integrated Hardware, Software, Services around Java
In just over a week after talks between IBM and Sun Microsystems collapsed, Oracle CEO Larry Ellison stepped in to close one of the biggest deals ever in IT. On Monday, Oracle announced that it will take over Sun in a friendly bid priced at $9.50 per share, valuing Sun Microsystems at just over $7 billion USD. The deal was a bright spot on Wall St. where the overall market was down over 250 points at close. Analysts are suggesting that this could lead to a 40-70% cut in jobs at Sun, whose financial problems obviously spurred the deal.
Like Silicon Graphics in bankruptcy again and now merging with Rackspace, Sun has been unable to recover from the dotcom bubble of 2000-2001. The biggest problem appears to be that Sun was unable to redesign and manufacture next-generation servers without falling behind other hardware companies and chip makers, nor were they able to monetize sufficiently their software platforms. Thus, the gains for Oracle are huge – the Java programming language, the MySQL database platform, and the Solaris operating system, all owned by Sun are the foundation of the internet in many instances, old and new.
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IBM leads IT Companies in Proclaiming “Open Cloud Manifesto”
IBM, AT&T, Sun, RedHat, Rackspace, SAP, and other companies (see full list below) joined together to endorse what is being called the “Open Cloud Manifesto” last week as part of a new push to define the next era of data servers on the internet. According to industry reports, Google and Amazon might be part of the group but were not included in the initial group of signatories. The entire venture is being seen as an aggressive open source challenge to Microsoft due to requirements such as “Cloud providers must not use their market position to lock customers into their particular platforms and limit their choice of providers” and “Cloud providers must use and adopt existing standards wherever appropriate. The IT industry has invested heavily in existing standards and standards organizations; there is no need to duplicate or reinvent them”.
For those interested, you can read the Cloud Manifesto in its entirety.
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Prospective Satyam Bidders May Include IBM – L&T, Tech Mahindra Confirmed
So many analysts, reporters, and bloggers are trying to link IBM to the bidding for Indian IT giant Satyam, whose disgraced CEO Ramalinga Raju (currently in jail) admitted to cooking the books and defrauding the company of over $1 Billion USD. This last week, Reuters released an article quoting the Economic Times in India, stating that IBM was in the bidding for the company and conducting due diligence in the second round of the sale process being overseen by a former Chief Justice of the Indian Supreme Court. Within 24 hours, Reuters released a second article denying IBM was in the bidding for Satyam, while the ET has stood by their story and repeated it in other articles. Some reports have stated that a law firm is representing IBM in the deal, a degree of separation that may lead to the attribution calls in both reports.
Yet, some are saying IBM doesn’t need Satyam with its 50,000 employees and IT staff that form the outsourcing backbone of the majority of the world’s Fortune 500 companies. IBM already has around the same number of employees in India currently, making it with Infosys, Wipro, TCS, Cognizant, and Satyam one of the top IT outsourcing service providers in the country. Analysts say Satyam’s potential liabilities, from a class action shareholder suit against Raju for destroying stock value and a lawsuit by Upaid for fraud / copyright issues could be problematic, to the tune of over $100 Million in liabilities. Bidders for the company have been unable to review the full accounts of Satyam, as the investigation into the accounting fraud is still ongoing. Clients have canceled accounts with Satyam, and the company has taken a bridge loan to cover operational costs until a new buyer is found. What advantage to IBM, then, in purchasing the company with so many problems?
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