Shareholders were mistaken with Sun sale

In a year after Oracle purchased SUN Microsystems company, analysts have questions: whether there was this transaction excessively hasty whether the payment for such absorption is proportional and that expects further successful business of earlier independent company.

In the last year of the independence the SUN Microsystems company suffered operating losses in the amount of $775 million. Less than two years later Oracle considers that it is normal on the way to receiving $1.5 billion profit on such business. It turns out that shareholders of Sun made a big mistake, having sold it too quickly, or Oracle successfully carried out recovery in record time? Both, judging by profits of Oracle.

Never missing the chance to brag (or to humiliate the rival), heads of Oracle could not resist against comparison of purchase of Sun and that exorbitant price that last year paid HP for 3Par. If Oracle paid multiply similar income, purchase of Sun would cost it more than $100 billion. But upon purchase by cash, this transaction poured out in $5.7 billion that is more similar to "theft".

As Safra Catz, the president of Oracle [[Katz Safra|]] said, the company increased a gross margin due to hardware business of Sun to 55%. It is comparable with the general margin in 41% which was received by Sun in the last operational year. Besides, reducing costs in a supply chain, the investment of Oracle in business of Sun put an end to many low-profit agreements on resales with other producers of hardware, she told.

The CEO of HP (and nowadays with - the president of Oracle)Mark Hurd added that this part of turnover means that clients got rid of doubts which hung over viability of Sun in the long term while it was independent business.

However that year for Sun was saddened by financial crisis which (taking into account its strong dependence on sales on the Wall Street) strongly struck the company. The previous year Sun reached 47% of a gross profit and showed steady improvement of a financial status in comparison with the middle of decade.

Nevertheless, Oracle is not going to be satisfied with what has already been achieved. Mrs. Katz not from those who evade from problems, speaking about future improvement of a margin from the equipment. "There are several ways. In connection with decrease in profit on the equipment (which is only the fifth part of revenues of the company), the formal operational margin decreased from 49% to 44% a quarter before the transaction with Sun", - she says.

Therefore if the management of Oracle will be able to pull out "the got stuck claw", it will be an evidence of the fact that the debugged mechanism of a company takeover still works at full capacity.

Let's remind that the Oracle corporation notes significant improvement of indicators of activity according to the results of the third quarter of 2011 financial year (ended on February 28). One of the world's largest software providers in three months gained $8.8 billion, having exceeded expectations of the analysts speaking on average about $8.7 billion. The previous year the company gained $6.4 billion income. Thus, growth was 37%.

In the third quarter income from sale of new software licenses jumped almost by 30% — to $2.2 billion that demonstrates the increased demand in a corporate segment. Sales of the server hardware more than trebled, having brought Oracle of $1.7 billion against $458 million the previous year. Net profit for the reporting period reached $2.1 billion, or 41 cents on an action. It is 78% more in comparison with the third quarter of last financial year when the company earned $1.2 billion (23 cents on the security).

Current quarter Oracle expects to show growth of revenue by 10–14% in comparison with last year and to get 69–73 cents earnings per share. Independent analysts speak about 66 cents. After announcement of financial results securities of corporation rose in price for $1.09, or 3.4% — up to $33.20.