Regulators May Not Approve Deal Until January
Sun Microsystems is losing about $100 million a month according to Larry Ellison, CEO of Oracle, the company that's set to acquire Sun. Oracle is waiting to get clearance from European regulators before the deal can go through and Oracle can step in and try to put an end to this loss.
Though understandably frustrated, Ellison is optimistic about the deal being approved. He conveyed this to his audience in a speech at a Churchill Club event in San Jose last night.
If money is really being lost at the rate Ellison says, you have to think he is tapping his foot quite rapidly. This is after all a $7.4 billion deal, and $100 million a month is not exactly small potatoes.
The deal was announced back in April. Oracle would acquire Sun for $7.4 billion at a rate of $9.50 per share in cash. The two companies have been long-term partners, for over 20 years. The acquisition was originally expected to close sometime in the summer, and it was unanimously approved by Sun's board of directors, but they're still waiting on the EU to approve it.
The longer it takes to get the deal approved (assuming it does eventually get approved), the more jobs could be in jeopardy. "Analysts have predicted Oracle will have to make major cuts in Sun's workforce and spending, to achieve its goal of increasing operating profit from Sun's business," notes Brandon Bailey at Mercury News. "Some analysts have said an extended delay could lead Oracle to cut more deeply, since uncertainty over Sun's future may be driving more customers to rivals such as Hewlett-Packard and IBM."
The EU is worried that Oracle acquiring MySQL would discourage competition, but Ellison maintains that it would do no such thing. He says that Oracle has no intention of spinning that unit off, which would greatly improve the chances of getting the deal approved.
The EU says that it may take until January to complete its review of the deal. If Sun keeps losing money at the same rate, the deal may look significantly soured.
Though understandably frustrated, Ellison is optimistic about the deal being approved. He conveyed this to his audience in a speech at a Churchill Club event in San Jose last night.
If money is really being lost at the rate Ellison says, you have to think he is tapping his foot quite rapidly. This is after all a $7.4 billion deal, and $100 million a month is not exactly small potatoes.
The deal was announced back in April. Oracle would acquire Sun for $7.4 billion at a rate of $9.50 per share in cash. The two companies have been long-term partners, for over 20 years. The acquisition was originally expected to close sometime in the summer, and it was unanimously approved by Sun's board of directors, but they're still waiting on the EU to approve it. The longer it takes to get the deal approved (assuming it does eventually get approved), the more jobs could be in jeopardy. "Analysts have predicted Oracle will have to make major cuts in Sun's workforce and spending, to achieve its goal of increasing operating profit from Sun's business," notes Brandon Bailey at Mercury News. "Some analysts have said an extended delay could lead Oracle to cut more deeply, since uncertainty over Sun's future may be driving more customers to rivals such as Hewlett-Packard and IBM."
The EU is worried that Oracle acquiring MySQL would discourage competition, but Ellison maintains that it would do no such thing. He says that Oracle has no intention of spinning that unit off, which would greatly improve the chances of getting the deal approved.
The EU says that it may take until January to complete its review of the deal. If Sun keeps losing money at the same rate, the deal may look significantly soured.
