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billion to buy The companiees valued the dealat $7.4 billion, including cash and debt. At $9.5p a share, the price is a 42 percent premiumover Sun'ws closing price on Friday. Sun shares rose aboug 38 percent on the reaching $9.20 in afternoojn trading. Oracle shares drooped about 2 percentrby afternoon, reaching $18.80. Redwoodr City-based Oracle (NASDAQ:ORCL) expects to add at leastr 15 cents to its bottom line from the deal in thefirsr year. The company expects to add $1.5 billion to operatinvg profit in the first year and morethan $2 billion in the seconc year.
The deal appears to end a drawn-out attemptf to sell Santa Clara-based Sun (NASDAQ:JAVA), which earlierd in the year had unsuccessfull negotiationswith (NYSE:IBM) which reportedly broke down at the last minute. It is expecterd to be completedthis summer. "The acquisition of Sun transforms the IT combining best-in-class enterprise software and mission-critical computin systems," said Oracle Chief Executive Larry Ellison in a Oracle uses Sun's Java software and language already in some of its productsd including its Fusion Middleware business and it uses the Solarixs operating system for its database business. Roger a former IBM executive and now CEO ofIngre Corp.
, said the "revenue and earnings momentunm from the string of acquisitions that Oracl e has made is forcing them to buy into the hardwarr business as they have run out of softwarer assets to buy. The timinv is interesting as startingg next quarter the BEA acquisition will no longer mask any slowdowjn in revenues or margin improvements in the corebusineses (BEA closed on April 29, When this deal goes through, then Oraclw becomes a single stacik hardware, OS and applications company -- a market positiom that HP has always and IBM had to retreat from.
” Burkhardy added that the "cause of Sun’zs demise lies in the commoditization of their hardware businesss from open source and open standards. The compellinbg cost advantage of Linux on commodity hardware squeezed out the revenuwe and profitfrom Sun’s SPARd server business and their software business is tiny by
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