64%(14)9 out of 14 people found this document helpful
This preview shows page 2 - 4 out of 4 pages.
Lastly, the integration costs would likely total to $1.1 billion (most of which will be incurred in 2010). Furthermore, the loss of customers could decrease operating income by $45 million. Though, the potential boost to operating profit, from the reasons stated above, amounted to $900 million per year.
Questions:Is Sun Microsystems a good strategic fit for Oracle?-Sun Microsystems is a good strategic fir for Oracle. First, it will help Oracle achieve its goal in becoming the Apple for business customers by combing its dominance in softwarewith Sun Microsystem’s expertise in hardware and networking. Second, Oracle would be able to add Sun Microsystem’s Java, MySQL, and Solaris platforms to its portfolio whichwould expand Oracle’s customer reach. Lastly, there are many expected synergies from this merger and little cannibalization. What approaches would you use to place a value on Sun Microsystems?-To determine Sun Microsystem’s value to Oracle, it would be beneficial to look at its stand-alone value, its acquisition price, and its synergy value. By looking at its stand-alone value, Oracle can determine if the company is overvalued or undervalued. Currently, the company is undervalued because the recession is hurting its financials while the company at its base is strong. That is why this is the perfect time for this merger to take place. Sun Microsystems can lean on the strong financials of Oracle during this time of struggle. By looking at its acquisition price Oracle can determine if this merger is a good strategic decision. The company’s value should grow if the deal is made, if it’s a good strategic decision. And, in the long run, this is the expectation.