Shares of computer hardware and software maker Sun Microsystems Inc climbed on Friday on a report the company is gearing up to go private.
Stock of Santa Clara, California-based Sun rose US$0.30, or 8.8 percent, to US$3.74 in late-morning trading on the Nasdaq Stock Market. Volume was heavy.
Friday's strongest level of US$3.98, at that time, was below the 52-week high of US$5.65 set on Dec. 27 last year. There was a 52-week low of US$3.29 on Aug. 12.
BusinessWeek's Inside Wall Street reported on Friday that Sun Chief Executive Scott McNealy is considering taking the company private with the help of Silver Lake Partners.
The report, which cites an unnamed hedge-fund manager close to McNealy and Silver Lake, said Sun's cash position of US$7.5 billion makes a leveraged buyout (LBO) of US$5 to US$5.50 a share possible. According to the report, the thinking behind the LBO is that Sun can reduce its size by selling assets and improve its business, eventually going public again.
Sun has about 3.4 billion shares outstanding, which would make the buyout worth around US$18 billion.
Officials at Sun weren't immediately available to comment. A spokesman at Silver Lake declined to comment. Neither company commented in the article.
Sun, which back in the heady days of the Internet famously claimed to put the "dot" in dot-com, has fallen on tough times in recent years. The company has continued to struggle and has ignored calls to slash costs by reducing its research and development and laying off workers. In recent months the company has made strides to regain its luster and has what some analysts say is a solid product road map. The company is also sitting on a horde of cash, which some analysts estimate is about US$2.50 a share.
Mark Stahlman, an analyst at Caris & Co, said an LBO of Sun "appears to make considerably more sense than many other M&A related transactions mooted for the beleaguered firm."
While Stahlman said he has no specific knowledge of the potential for Sun to go private, he said the risks and rewards for both current investors and potential private investors appears to be favorable. He pointed to storage maker Seagate Technology, which was able to go private and then re-emerge as a public company, aided by Silver Lake Partners, as an example of a successful technology LBO. Stahlman noted that given pressure on many technology companies' valuations, the current conditions in the capital markets appear to favor a LBO for Sun.
Hamed Khorsand, an analyst at BWS Financial, who rates Sun a "buy," said talk of an LBO could spark other suitors, who may move to buy it outright.
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
Popular vape brands such as Geek Bar might get more expensive in the US — if you can find them at all. Shipments of vapes from China to the US ground to a near halt last month from a year ago, official data showed, hit by US President Donald Trump’s tariffs and a crackdown on unauthorized e-cigarettes in the world’s biggest market for smoking alternatives. That includes Geek Bar, a brand of flavored vapes that is not authorized to sell in the US, but which had been widely available due to porous import controls. One retailer, who asked not to be named, because
CHIP DUTIES: TSMC said it voiced its concerns to Washington about tariffs, telling the US commerce department that it wants ‘fair treatment’ to protect its competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs. “The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City. TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said. In addition, the chipmaker has voiced its concern to the US Department of Commerce
STILL LOADED: Last year’s richest person, Quanta Computer Inc chairman Barry Lam, dropped to second place despite an 8 percent increase in his wealth to US$12.6 billion Staff writer, with CNA Daniel Tsai (蔡明忠) and Richard Tsai (蔡明興), the brothers who run Fubon Group (富邦集團), topped the Forbes list of Taiwan’s 50 richest people this year, released on Wednesday in New York. The magazine said that a stronger New Taiwan dollar pushed the combined wealth of Taiwan’s 50 richest people up 13 percent, from US$174 billion to US$197 billion, with 36 of the people on the list seeing their wealth increase. That came as Taiwan’s economy grew 4.6 percent last year, its fastest pace in three years, driven by the strong performance of the semiconductor industry, the magazine said. The Tsai
RSS