Sun's market capitalisation sank below $3bn yesterday as Forbes reported via Reuters that Sun is under pressure to sell itself or some of its assets to get out of the sinking sands it seems inexorably drawn to. In July the market cap went below $8bn as Sun became a mid-cap level company. The term means its market capitalisation …
With $3B in the bank, Sun could go private and then they could stop pandering to the insane blathering of the stock market.
Not so long running soap?
At this rate the iceberg and the Suntanic are due to meet very soon! Only the vultures are buying Sun stock, the ones looking to dismember the company and probably profit from the patent portfolio. Unless Schwartz takes action soon it will be too late and instead of 15,000 employees getting pink-slipped it will be the whole 28,000. Even if Sun buys itself, it will still need capital to invest to continue current operations, let alone future developments. The $3bn in the bank won't cober both, so a private Sun will still be beholden to the "insane blathering of the stock market".
On an ironic note, I'm told that NetApp could actually raise the cash to buy Sun - how funny would that be!
Sun is now a penny stock
Ok...the share price is $3.95 but last year Jonathan decided to do a 4-1 stock split reversal.
If he had not done that it would be a .97 stock, but then again maybe it would not have fallen so much.
The first thing Sun needs to cut is the ROCK chip. The chip is a failure and Sun cannot afford to design/build/sell that experiment. Give all manufacturing to Fujitsu including the T machines.
The story says both:
"It has just reported a quarterly loss of $1.7bn for its first fiscal 2009 quarter."
"analysts are expecting Sun to lose $1.35bn on revenues of $12.8bn for its fiscal 2009 year,"
First, if Sun has already lost $1.7bn in the first fiscal quarter and the analysts expect the loses for the fiscal year to be $1.35bn, doesn't that say the analysts expect Sun to make $0.35bn in the next three quarters? I guess they could mean lose another $1.35bn in the year, but that's not what is says.
Second, $1.4bn of the $1.7bn first quarter loss was goodwill write downs and other non-cash stuff. That's a bit different from real cash money losses. From Sun's investor relations site:
"On a non-GAAP basis, net loss for the first quarter of fiscal 2009 was $65 million..."
"Sun ended the quarter with a cash and marketable debt securities balance of $3.121 billion and generated cash flow from operations for the first quarter of fiscal 2009 of $148 million. "
So, they "lost" $1.7bn but ended up the quarter with $148 million more than they started with. This kind of thing isn't at all unusual with the GAAP and accounting rules.
Finally, a couple years ago Sun said they'd reach a 10% operating margin by fiscal 2009 (I think). For a while they were on or ahead of that plan. I personally think the current problems are more a result of external influence, like the sub-prime mortgage financial collapse, than anything Sun management messed up. It's not like Sun is the only tech company whose stock has tanked this year.
Also, the market cap number is nice and all, but you have to convince over %50 percent of the shareholders to sell in order to actually buy a company. I think it's unlikely that %50 percent of Sun stock holders would be happy to sell their shares at $4. I bought some earlier this year and If I can't sell them in the $15 to $20 range, I'm just going to keep them for awhile. I currently don't seem to have any gains I could use losses to balance out.
Government bail out
I think their strategy is to go through all their money as fast and as reckless as possible than stand in the bail out line in Washington.
"On an ironic note, I'm told that NetApp could actually raise the cash to buy Sun - how funny would that be!"
About as funny as Compaq buying Digital Equipment Corp (whose CEO once publicly stated "Unix is snake-oil!).
The Geek, because only an uber-one would remember that 8^}.
Over 50% of the shares are owned by investment firms.
If the market cap is $3B and you have over $3B of cash the market place says your company is worthless as an ongoing operation.
Sun should have written down the value of MySQL, but they choose to write off all hardware so they can sell the whole hardware business to Fujitsu.
I would not buy Sun stock for $3 or the pre stock split reversal price of 75 cents
Amen Joel! Sun is doing much better than this artcile purports
You hit more key points than the article did, I have to wonder if the author is shot selling Sun...?
Did you catch the part where sun made over 12 Billion in revenue last year? thats with a "B" They have the luxury of staying true to their employees while they can, when I bought their stock they were spending over 2 Billion in R&D alone, they can very easily become a "profitable company" but they are in it to win it so to speak. Also did anyone catch how large the growth of their storage sector was - google the reg article, the industry was up like 17%, and Sun was up way more than that. I am holding this stock (confidently) for the long haul. Sun has smart products and still has a great repuation amongst IT workers like myself who actually make purchasing decisions and reccomendations to many large companies. Don't let the fear mongering get to you - Sun still has a bright future. This is not the Titantic (look at M$ direction for that)
@ AC where do you get your facts? Why in the world would anyone consider a company that has a cash on hand equal to their market capitalization as bad?? This is a good thing, it means they have a lot of room to manuver, and plenty of cash to invest in them selves.
Sun is also still pursuing a 2nd round of stock buy backs, and that 2 bil I believe is already "spent" in the books, but the stocks have yet to be purchased. So has it hit the bottom, maybe not, but I don't see them sinking anytime at all, their IP portfolio is worth 3 bil alone on the open market. I beleive this is in fact what Warren Buffet would call a steal....wonder if BH has purchased recently?
Sun is about to be split up and sold
Check this out...someone is getting the details of the buyout. When a company has $3B of cash and its market cap is <$3B its time to raid the company for the top 10%, patent portfolio, and customer list.
"I don't think there's a buyer for the company as a whole today," said one of the bankers, who has discussed with some of the companies their interest in buying Sun.
"One business that Sun could sell fairly easily is StorageTek, a data storage business that it bought in 2005 for $4.1 billion. Bankers estimated it to be worth $750 million to $1 billion today."
"if Sun sold MySQL to a rival open-source company such as Red Hat Inc (RHT.N: Quote, Profile, Research, Stock Buzz), it is unlikely to fetch more than $300 million, the first banker said"
....Makes the $1B price awfully expensive
But then again....
"If you buy this company you are just going to buy baggage, the cost structure is through the roof. The product road map is nonexistent and customers are leaving in droves. When you see these three things, only a dumb company would think of buying Sun." ...without a pillage plan
Go Private? !! Go Staroffice!
How can they go private using the cash in the bank ? Once they spend that, then they will have nothing left to subsidize their quarterly losses.
Sun has been setting for years, unfortunately, and just relying on government contracts. They really should and could have made a much bigger impact in the business world with Staroffice. They should be wiping the floor clean with that pile of crap MS Office 2007 that no body really wants. They needed to invest more in the product firnedliness, compatibility with office, and of course marketing, but had they priced it more sensibly at a 50% discount to MS, then they would have now been laughing all the way to the bank
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