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IBM Lets Sun Set (Linux Journal)

[Posted April 6, 2009 by cook]

Linux Journal's Justin Ryan looks into the latest news involving IBM's plans to acquire Sun Microsystems. "Reports surfaced late this evening that computing giant IBM — which has been in talks for some time to buy Sun Microsystems — has pulled its $7 billion offer to buy the struggling company. According to reports, IBM withdrew the offer after Sun's Board of Directors made "onerous" requests following IBM's decision to lower its offer for the firm. IBM initially offered $9.55 per share, but dropped that offer to $9.40 — less than a $1.00 premium on Sun's current stock price — due in part, it says, to the discovery that far more senior employees than originally expected are covered by "change of control" contracts."
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Over compensated CEO's

Posted Apr 6, 2009 16:06 UTC (Mon) by ccyoung (guest, #16340) [Link]

where have I heard that in the news lately?

IBM Lets Sun Set (Linux Journal)

Posted Apr 6, 2009 16:15 UTC (Mon) by trasz (guest, #45786) [Link] (1 responses)

Great news. Acquisition would certainly mean killing Solaris.

IBM Lets Sun Set (Linux Journal)

Posted Apr 6, 2009 16:39 UTC (Mon) by leoc (guest, #39773) [Link]

Not necessarily. IBM already sells servers running Solaris.

IBM Lets Sun Set (Linux Journal)

Posted Apr 6, 2009 16:26 UTC (Mon) by pr1268 (guest, #24648) [Link] (10 responses)

It seems that these "change of control" contracts have a self-destruct effect on the corporation; while they promote loyalty amongst the senior employees, they also have the side-effect of making the corporation less appealing in a merger/takeover situation.

If IBM had consummated the Sun takeover, then a lot of executives (and talent) could have left with big sums of money. Now that the deal is dead, it is possible (though not likely) that Sun could collapse into itself.

Just my observations from the visitors gallery...

IBM Lets Sun Set (Linux Journal)

Posted Apr 6, 2009 17:34 UTC (Mon) by me@jasonclinton.com (subscriber, #52701) [Link] (4 responses)

> it is possible (though not likely) that Sun could collapse into itself

Almost like some kind of (wait for it) ... supernova?! Oh, the Sun puns never get old.

IBM Lets Sun Set (Linux Journal)

Posted Apr 6, 2009 18:00 UTC (Mon) by noahm (subscriber, #40155) [Link] (2 responses)

I don't think Sun has sufficient mass to generate a supernova event at this point. Sun's demise won't be so dramatic. It may go the way of the red giant, expanding one last time in some futile attempt to draw some last attention to itself, only to have most of its remaining mass evaporate away. Left behind will be a tiny chunk of a company with no significant output, just a mass of intellectual property. What happens to this IP portfolio will be of interest.

IBM Lets Sun Set (Linux Journal)

Posted Apr 6, 2009 19:35 UTC (Mon) by nix (subscriber, #2304) [Link]

So Sun is an SGI-type star^Wcompany, then?

IBM Lets Sun Set (Linux Journal)

Posted Apr 7, 2009 17:09 UTC (Tue) by jd (guest, #26381) [Link]

So a nova or some really nasty solar(is) flares, then? If Games Workshop bought Sun, it could decay into a White Dwarf.

Accidental pun

Posted Apr 8, 2009 3:39 UTC (Wed) by pr1268 (guest, #24648) [Link]

Almost like some kind of (wait for it) ... supernova?! Oh, the Sun puns never get old.

I promise that pun was an accident. Honest. It is kind of convenient, though. :)

IBM Lets Sun Set (Linux Journal)

Posted Apr 7, 2009 3:09 UTC (Tue) by iabervon (subscriber, #722) [Link] (2 responses)

Generally, such controls are intended to make the corporation less appealing in a merger/takeover situation, as a way of preventing hostile takeovers. Of course, anything that works against a hostile takeover will work against a non-hostile takeover, because anything that could be undone in order to prepare for a merger could also be undone upon a hostile takeover.

And long-lived companies with volatile stock prices in a market segment prone to bubbles tend to worry more about hostile takeovers (some dotcom startup raising a ton of money, and deciding to buy them some day when the stock is low and there's a lot outstanding) than how they'd do in a merger with a company they want to merge with.

IBM Lets Sun Set (Linux Journal)

Posted Apr 8, 2009 15:12 UTC (Wed) by Wol (subscriber, #4433) [Link]

I worked for a company that pulled a poison-pill trick like this. But it was a "this poison wears off" trick. Basically, under UK law, if staff are let go they HAVE to be given a pay-off.

This company I worked for wanted to upset a hostile take-over, because it knew the predator was an asset stripper and wanted to get rid of a lot of the staff. So the company unilaterally modified all employment contracts from the statutory minimum to "one (or it might have been two!) month's pay per year's service". All of a sudden, the cost to the predator of sacking staff doubled or more ...

But the change was only to then-current contracts, so a few years on and a bit of staff turnover later, the poison pill started wearing off.

Cheers,
Wol

IBM Lets Sun Set (Linux Journal)

Posted Apr 9, 2009 14:26 UTC (Thu) by GreyWizard (guest, #1026) [Link]

anything that could be undone in order to prepare for a merger could also be undone upon a hostile takeover

Why couldn't the contracts have clauses to permit the company to cancel the benefits with a few months notice as long as no change of control occurs in that time? (Obviously Sun didn't think that far ahead in this case, but you seem to be arguing that it's not even possible.)

IBM Lets Sun Set (Linux Journal)

Posted Apr 7, 2009 18:05 UTC (Tue) by Nelson (subscriber, #21712) [Link] (1 responses)

These so-called "bitter pills" or "poison pills" are often used for leverage in negotiation. It's curious, IBM buying Sun maybe a good exit for Sun. Without IBM buying them, at the very least due to the poison pills, the cost probably went down to any other suitors. I'm sure some people within Sun think they'll be just fine on their own but that is getting harder to see. From the folks I've known working there, they've already started to dramatically erode the staff on a lot of projects. It sounds like Sun was trying to sink the hook, they wanted the deal to happen, just couldn't deal with a lower price or something else. I wouldn't be entirely surprised if they crawled back to IBM but they'll have to deal with IBM's terms.

IBM Lets Sun Set (Linux Journal)

Posted Apr 8, 2009 0:13 UTC (Wed) by rahvin (guest, #16953) [Link]

If they go back the offer will likely be substantially reduced in price. Probably not higher than current stock price at the time and it wouldn't surprise me if it was lower as IBM invested substantially in this negotiation and were essentially brushed off.

The Boards are comparable only in their mediocrity

Posted Apr 6, 2009 18:45 UTC (Mon) by shieldsd (guest, #20198) [Link] (8 responses)

See http://daveshields.wordpress.com/2009/04/06/sun-microsyst...

It includes links to my three other links on this topic.

The real losers here are the current Sun employees. If IBM were to acquire SUN then it would *have* to open up the key IP assets: Solaris, Java, OO and MySQL.

The Sun employees that have been working inside the firewall would be able to build marketable reputations based on their open-source contributions.

thanks,
dave
http://firesampalmisano.wordpress.com

The Boards are comparable only in their mediocrity

Posted Apr 6, 2009 19:42 UTC (Mon) by trasz (guest, #45786) [Link] (7 responses)

Except that all four are already open.

The Boards are comparable only in their mediocrity

Posted Apr 6, 2009 20:42 UTC (Mon) by Kit (guest, #55925) [Link]

Perhaps he meant an open development process? Although, I'm not sure why they'd have to...

The Boards are comparable only in their mediocrity

Posted Apr 6, 2009 21:55 UTC (Mon) by shieldsd (guest, #20198) [Link] (1 responses)

Ho,Ho. IBM has been offering extra developers to Sun for *years* except Sun didn't want to give up control. Solaris has attracted few than ten outside contributors in two years. As for Java, I've written scores of blog posts on that one, and don't want to to go there again. MySQL was just an enormous waste of Sun's precious little cash.

thanks,dave

The Boards are comparable only in their mediocrity

Posted Apr 7, 2009 12:20 UTC (Tue) by robilad (guest, #27163) [Link]

Dave, hg fclone is your friend. Point it to the forest you care about at hg.openjdk.java.net, and hack away.

The Boards are comparable only in their mediocrity

Posted Apr 7, 2009 3:28 UTC (Tue) by nevyn (guest, #33129) [Link] (3 responses)

Given that OpenSolaris != Solaris and that Java has been pulled kicking and screaming towards open source by Red Hat and others (and you still need Open JDK, ie. non Sun Java). I find your off hand comment entirely incorrect.

The Boards are comparable only in their mediocrity

Posted Apr 7, 2009 12:16 UTC (Tue) by robilad (guest, #27163) [Link] (1 responses)

Java hasn't been pulled kicking and screaming anywhere by anyone. A kingdom for less mediocre melodrama on LWN!

The code for the development branch of the JDK, JDK 7, has been posted almost two years ago on http://openjdk.java.net, and has been open source since, with Sun and the rest of the OpenJDK community working hard to first replace the few left over binary blobs from third parties that didn't want to give Sun the necessary rights to publish their source code as open source components of OpenJDK. Then the OpenJDK community proceeded to build a fully free, compatible and (of course!) open source implementation of Java SE 6, OpenJDK 6, working together with the IcedTea project, which is basically what's in your distribution today. Two years of hard work by Sun employees as well as employees of Red Hat, Google, Canonical, Aicas and many outstanding individual hackers like Karl Helgason, both within OpenJDK, and outside it.

Collaboration - it works, people.

With these two very successful efforts behind its belt, the OpenJDK project now is increasingly focusing on JDK 7. So go check out Mark Reinhold's talk ( http://www.archive.org/details/fosdem_2009_free_java_the_... ) at the Java Libre dev room at FOSDEM conference for details, that was kindly recorded and published online by Andrew Hughes.

The Boards are comparable only in their mediocrity

Posted Apr 9, 2009 14:34 UTC (Thu) by GreyWizard (guest, #1026) [Link]

A kingdom for less mediocre melodrama on LWN!

Two kingdoms!

The Boards are comparable only in their mediocrity

Posted Apr 7, 2009 16:21 UTC (Tue) by zooko (guest, #2589) [Link]

shieldsd wrote: "If IBM were to acquire SUN then it would *have* to open up the key IP assets: Solaris, Java, OO and MySQL."

This sort of confusion keeps coming up. There seem to be different meanings that different people are using for the word "open".

* open source? The four projects mentioned are already publicly distributed under open source licences.
* open development practices? I don't know about this. Does MySQL-in-Sun have open development practices? Did MySQL-before-Sun have open development practices? What *are* open development practices? This is a serious question -- I'd like to know the community consensus on this.
* nice friendly people? I used to think Sun was populated by nasty jerks, but recently I've started to like some of them more and more. I guess reading someone's blog will do that to you -- make you like them more. Do you like anybody who works for Sun? Does it matter to the definition of "open"?
* outside contributors? Surely an open source project is more robust when it has outside contributors, but is that what people mean when they say "Open"? I know of a lot of open source projects -- the vast majority of them, actually -- which never got outside contribution beyond token amounts. Should we say that those projects weren't "open"?

As far as I can tell, the only meaning that is easy to judge is "open source", and the four projects named are already clearly open source. The other meanings might be really important, too, of course, but it isn't clear to me what they mean in this conversation.

Maybe the real issue that shieldsd is concerned about has something to do with corporate strategic direction-setting. That, too, is a very important issue, but maybe we should use a different word than "open" to refer to the degree to which a project is independent from a single corporation's influence.

IBM Lets Sun Set (Linux Journal)

Posted Apr 7, 2009 6:26 UTC (Tue) by gdt (subscriber, #6284) [Link] (1 responses)

Why Ryan's Linux Journal article rather than Lohr and Vance's New York Times article? Despite claiming "anonymous sources close to the negotiations" it looks to me like the LJ article is a simple paraphrase of the NYT article with the pitiful attribution "according to reports".

IBM Lets Sun Set (Linux Journal)

Posted Apr 7, 2009 14:13 UTC (Tue) by cook (subscriber, #4) [Link]

Here's a link to the New York Times article.

A modest proposal

Posted Apr 7, 2009 7:30 UTC (Tue) by njs (subscriber, #40338) [Link] (6 responses)

Obviously Red Hat should buy Sun.

A modest proposal

Posted Apr 7, 2009 14:50 UTC (Tue) by sbishop (guest, #33061) [Link] (2 responses)

They seem like a perfect fit for the software half of Sun. Do you think that they would want the hardware half too? Perhaps they could put together a three-way deal with a company interested in the hardware. I don't know how often that kind of thing happens.

A modest proposal

Posted Apr 7, 2009 17:21 UTC (Tue) by jd (guest, #26381) [Link] (1 responses)

Ever since Sun GPLed their T1 and T2 CPUs, arguably a big chunk of the hardware IP has become indistinguishable from software IP. Not sure if Red Hat could exploit that - I haven't heard of any revolutionary stuff coming out of the community for the processor, nor have I seen anyone upload any variants of the processor to Open Cores. Mind you, Sun aren't exactly pushing the concept a whole lot.

A modest proposal

Posted Apr 8, 2009 19:16 UTC (Wed) by ajross (guest, #4563) [Link]

Sun GPLed the HDL code for the CPUs, not the synthesis results, nor the masks, nor the process hacks. A bunch of Verilog does not a product make. If all it took to compete in that space was a text editor then Intel wouldn't be kicking everyone's butts to the extent that they are.

And, frankly, the Niagra CPUs aren't such great shakes. 8 small/slow (i.e. shallow pipeline, ~1GHz) cores with wide (4-way) threaded dispatch vs. 4 big/fast (deep pipeline, 3GHz) core with 2-way hyperthreading. Meh. The Intel offering is just as good even in the most parallel workloads, and *much* faster for typical software. Both AMD and IBM have more compelling CPUs, IMHO.

There's always a bigger fish

Posted Apr 7, 2009 16:37 UTC (Tue) by pr1268 (guest, #24648) [Link]

And to think that Red Hat itself is a takeover target.

"There's always a bigger fish." —Qui-Gon Jinn

A modest proposal

Posted Apr 7, 2009 17:23 UTC (Tue) by jd (guest, #26381) [Link] (1 responses)

Slackware would be a better buyer for Sun, surely.

A modest proposal

Posted Apr 8, 2009 12:10 UTC (Wed) by rhdxmr (guest, #44404) [Link]

That sounds good

Sun lets IBM Set?

Posted Apr 9, 2009 14:20 UTC (Thu) by davecb (subscriber, #1574) [Link]

Hmmn, that sounds backwards...

The other reports said that the
Sun board rejected IBM's lower offer,
and then announced the end of the
exclusivity period for IBM.

--dave

Oracle Buys Sun

Posted Apr 20, 2009 14:42 UTC (Mon) by shieldsd (guest, #20198) [Link]

Oracle, not IBM, bought Sun.

See http://daveshields.wordpress.com/2009/04/20/oracle-to-buy... for my thoughts on Oracle's smart move.

thanks,dave http://opensourcesoftwareconsultant.net


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