The split, which must be approved by shareholders at a meeting Nov. 8, will take place Nov. 9.
Over the years, Sun has been successful in competing against Microsoft's Windows for server operating systems. It also has successfully dislodged Hewlett-Packard and IBM to become the top seller of Unix servers, expensive hardware used to build the Internet and corporate networks.
However, Sun faces steeper competition with new servers coming from HP, Compaq Computer, SGI and especially IBM. Sun's own top-end product is expected to arrive in 2001.
Sun's stock today closed at an all-time high of $119.79. The company reported net income of $660 million on revenue of $5 billion in its most recent quarter.
Some see the Linux operating system as a threat to the low end of Sun's product sales because Linux is popular on servers based on Intel chips. But Sun's popularity has meant it has been able to keep large corporate software companies such as Oracle and SAP interested in Sun's version of the Unix operating system, Solaris.