June 9, 2005

Sun may have done better to give dividend instead of buy StorageTek

Author: Melanie Hollands

When Sun Microsystems Inc. announced June 2 it will buy Storage Technology Corp. for $4.1 billion in cash, it marked the company's biggest-ever acquisition. Management expects StorageTek to add over $2 billion to Sun's annual revenue of $11.4 billion -- that's a one-time boost to Sun's revenues of around 18 percent. In addition, Sun acquires 1,000 (around 10 percent) more sales people, and the combined entity's customer base will total around 17,000.

Sun is making big bet that the deal will be the means to do three things: increase its presence in the data storage market, expand its product offerings to the enterprise market, and deliver revenue growth -- something Sun has lacked for more than three years.

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