Should Oracle acquire Sun Microsystems Summary

Sun Microsystems
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Sun Microsystems
1. Should Oracle acquire Sun Microsystems?
With no doubt, Oracle should acquire Sun Microsystems. In particular, the acquisition will improve Oracle’s core competencies, which means that the company will gain and sustain its competitive advantage. Based on Larry Ellison, Oracle’s chief executive officer (CEO), Oracle and Sun Microsystems had a good previous business relationship. For example, in the 1990s, the two companies united to compete against Microsoft by exploiting the Java programming language and Solaris operating system. As such, Ellison was sure that acquiring Sun Microsystems will make his company the Apple of business customer, which was focused on delivering high-quality products and seamlessly integrated computer products, such as hardware and software components. Strategically, the acquisition would combine Sun’s expertise in networking and hardware with Oracle’s dominance in software. Oracle’s product portfolio would be expanded through additions of the highly prized Solaris platform, MySQL, and Java programming language (Varney & Loutskina, 2010). Already, Oracle database management systems ran on Solaris operating system and the company used Java. When it comes to the cannibalization of database management systems, MySQL and Oracle products had different customer segments. For instance, the Oracle database management system was for high-end clients and MySQL would be marketed for small clients. Ellison had gathered more information about Sun Microsystems and he already had access to proprietary information. In other words, he was just waiting for the right time to acquire Sun. However, Oracle’s competitor was also eyeing Sun and the only determiner was who suggested the best offer.
2. How much is Sun worth?
Three Stanford graduate students founded Sun Microsystems in 1982. The company entered the technology industry during a time when pairing operating systems, software, and hardware was the norm. The primary competitive advantage of Sun was the introduction of UNIX-based Solaris, which allowed computers to be compatible with numerous hardware and software products readily available in the market. Between 1985 and 1989, Sun's annual growth rate was 145%, which made the firm the fastest-growing in the United States of America (USA). Sun is worth about $11.4 billion (Varney & Loutskina, 2010). At some point, Sun started losing consumers to competitors and nothing seemed to work in favor of the company. For instance, in 2008, the company acquired AB for $1 billion in an effort to boost its growth and sales. The 2008 financial crisis in the USA further deteriorated things for Sun. In 2009, Sun expected a sales drop by 17.5% (Varney & Loutskina, 2010). Things were falling down for Sun, a company that once had garnered a superb reputation for its expertise in technology products. 
3. What rate of return should Oracle require on the acquisition?
Oracle’s strategic plan to acquire Sun was meant to boost its products and services. The combination of Oracle’s and Sun’s products and service...