This week in Sun
Sun Microsystems takes out its checkbook this week and makes a big bet on its future.
In a move to add to its market heft, Sun is acquiring storage specialist StorageTek in a deal worth $4.1 billion. The deal will give Sun a greatly expanded storage product line, additional sales channels, and a larger sales force and partner network, company executives said.
Sun CEO Scott McNealy said the combination of two companies' gear will make Sun one of the largest providers of "information lifecycle management" products, which combine hardware and software for creating, storing and archiving corporate data.
Sun and StorageTek's storage product lines will be merged and sold by a combined sales force, executives said. StorageTek, which employs about 7,100 people, will mix into Sun's storage organization under Mark Canepa, executive vice president of Sun's storage products.
Sun hopes the $4.1 billion bet will help restore Sun's financial fortunes, but it's a huge bet: It's the last cash deal of that size Sun will be able to make. Sun plans to spend $4.1 billion of its $7.4 billion in cash and marketable securities on StorageTek in a deal expected to close by late summer or early fall. Even with the $1 billion in cash StorageTek will bring, Sun will have a hard time affording any comparable moves.
Sun is trying to rebuild its primary business, selling powerful networked computers called servers, and is trying to elevate its software products with an open-source revamp. The StorageTek acquisition, however, shows that Sun believes storage is the business where it can get the most bang for its buck.
In another resuscitation effort, eBay plans to acquire Shopping.com in a $620 million cash transaction. The acquisition brings the Web's biggest comparison shopping engine under the hood of the largest auction site at a time when eBay has been struggling to maintain its growth in the face of increasing competition from Yahoo, Google and others.
The acquisition puts eBay in close competition with the commercial engines of search giants Yahoo and Google. The deal also is a sure sign of eBay's financial interest in the booming search-engine marketing business, which is expected to be worth more than $5 billion this year.