Network Computing is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

  1. Home
  2. Careers-and-certifications
  3. Sun-acquire-storagetek-41b
  4. Page
  5. Sun to Acquire StorageTek for $4.1B: Page 2 of 3
Careers and Certifications

Sun to Acquire StorageTek for $4.1B: Page 2 of 3

In early-morning bombshell, Sun outlines plan to 'juice' channel sales by buying tape partner
June 02, 2005

Sun execs claim the deal will be accretive to Sun within its first year of completion, but they won't set a specific target.

Both Sun and StorageTek have been struggling, particularly as storage spending tightens overall and, in StorageTek's case, tape sales weaken (see Storage Spending Slips).

Analysts grilled both companies on a conference call this morning, and a few key points emerged:

  • Channels are the big attraction. McNealy repeatedly referred to StorageTek's channels as key to this deal. He and other execs acknowledged Sun has been challenged in selling storage, and he repeatedly referred to StorageTek as having the needed feet on the street to get the word out. The plan is to use StorageTek's sales channels to boost Sun's presence, enabling it to bring along software and server products as well.
  • Sun's not worried about product overlap. Neither Sun nor StorageTek is concerned about resolving overlap of products OEM'd from Engenio Information Technologies Inc., execs claim (see Engenio's Sun Rises). While conceding there may be some overlap and consequent "simplification" of product line, execs made it clear they weren't thinking about sweeping changes.
  • Sun's not worried about HP. StorageTek's recent resale agreement with Hewlett-Packard Co. (NYSE: HPQ) won't be affected by the merger, execs say (see StorageTek, HP Deal on Tape). "We expect the relationship to continue as is. I don't see any major concerns there," Canepa said.
  • Sun's not worried about tape's future. CEO McNealy sees no wolf at the door for tape libraries: "Thirty-six percent of the archived data on the planet is on StorageTek equipment... that's 5 percent more cost-effective than archiving on disk," he asserts.
  • Sun's on a spending spree. After the merger, Sun hopes to have $4.5 billion left in cash and investments with $1.1 billion in debt. This will enable it to keep buying into its strategy of being a heterogeneous data center provider. McNealy made it clear StorageTek wasn't the only acquisition on Sun's radar, just the most recent one.

Sun's latest purchase should keep it more than busy for awhile. The consolidation resulting from the move will also take time to reverberate in the market. Stay tuned for more as this story develops.

Mary Jander, Site Editor, Byte and Switch

Tags:

News
Careers and Certifications