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Skepticism surrounds Apple, Sun report

Acquiring Apple would give Sun a viable consumer-level desktop offering, but getting the two companies in sync could take more work than Sun is prepared for, if the deal comes to fruition.

News today that Sun Microsystems is poised to make a $33-per-share bid to acquire Apple Computer was met with skepticism from some industry analysts. According to a Wall Street Journal report, Sun is close to making a deal to buy the ailing systems vendor.

Buying Apple at $33 per share (about $4 billion) would be a dubious move on Sun's part, said Robert Herwick, a financial analyst with Hambrecht & Quist. The share price is expected to continue dropping until it hits about $22, according to some analysts.

But it isn't just the price that makes the deal unwise, added Herwick. For one thing, it's unlikely that the acquisition would make a difference in the near term, particularly with developers. "Is Sun's buying Apple going to turn around the application development situation? I would be skeptical," Herwick said. As Apple's market share has decreased over the past few years, many developers have abandoned the Macintosh platform to focus instead on Windows software.

Managing Apple after the acquisition would also be tough, said Herwick. "Sun is a much better managed company than Apple. Just the task of going in and straightening out Apple would be tough," he added.

Herwick also questioned the basic motivation for such a deal. "[Sun CEO] Scott McNealy is determined and courageous, but the primary challenge in his life is challenging Microsoft. I'm not sure there'd be a groundswell approval from Sun's board on this," said Herwick.

The two biggest hurdles facing Sun and Apple would be their different RISC processors and the mismatched company cultures, commented Paul Cubbage, a senior analyst at Dataquest, in San Jose, California. "The Apple guys are cowboys. They're all off doing their own thing," said Cubbage. In contrast, he added, "Sun is run with class engineering groups."

Cubbage said he'd rather see Sun put its resources into Java and the Internet, but another industry analyst said a deal between the two would be mostly positive. "By incorporating Java and Internet connectivity into the Mac, Sun could extend Apple's still-viable hardware business to include Internet terminals and high-end business machines," commented Mitch Ratcliffe, editorial director of Digital Media, a Softbank-owned newsletter.

Sun would also benefit from access to Apple's server- and information-management tools, added Ratcliffe. These tools are easier to use and could make Sun even more money in the Net server market.

Contrary to Cubbage's opinion, Ratcliffe says the two companies' cultures are very similar. "The Sun culture is very similar to the old beer-bash mentality that fueled Apple's growth. It might be fun to work at Apple, again," he noted.

But Sun isn't necessarily the best fit for Apple, said Chris Christiansen, an analyst with IDC, a market research and consulting company based in Framingham, Massachusetts. "Apple's and Sun's cultures are completely at odds. Motorola makes more sense. Motorola understands high volumes, and they have a systems business that's always been held back by its customers," said Christiansen.