Sun Going Down for Third Time

(MoneyWatch)  Just a couple of weeks ago I noted that Sun was sinking under the weight of Oracle, with the acquisition looking more like punishment than salvation of the former. But now things are looking even grimmer. Sun is about to lay off another 3,000 employees. The longer it is before the deal with Oracle takes hold, the less Sun could actually bring to the table.

The physical ?€" or fiscal, to be accurate ?€" pain has been acute so far:

Meanwhile, the delay is causing financial turmoil for Sun's business. Oracle CEO Larry Ellison said at an industry gathering in Silicon Valley last month, "Sun is losing $100 million a month; we'd like to get this thing done."

That does seem a bit high, but even if so, Sun is currently pouring out red ink like water from Old Faithful. Would someone remind me why this deal is happening? Ah, yes -- Oracle expects to get something out of it. Unfortunately, the something is actually a number of software product lines, not the hardware business, which is the main part. And as Sun twists from the lack of direction, both HP and IBM both work plans to pick off as many customers as they can. Not a big problem when the realities of the situation create as much fear, uncertainty, and doubt as you might unreasonably want.

The problem is that the deal can't go ahead until the European Union signs off on it, as a U.S. regulatory blessing isn't enough. Oracle will have to make a tough decision to do something like perhaps sell off MySQL, or see the entire deal blow up. That would sink Sun at this point, but without nailing down MySQL as a lower-end competitor, there suddenly is a lot less appeal that Sun has. Java is all well and good, but it's something that Oracle could clearly live without. The chances are growing that the delays will ultimately cause Sun to go out of business. How Oracle is less at an advantage that way, versus buying the failing company, is hard to see.

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