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IBM Wants to Buy Sun - Why?
If IBM can pull in Sun for 7B, it will be a great deal. 7 billion less the 3.1b in cash that Sun has on its books would mean a net of 3.9b for 12b in sales with an average margin of 47% = 5.64b of gross profit.
Most of Sun expenses are R&D, 2.1B, and Opex 27%. Sun is already planning massive layoffs to get this more in line with industry average of 15-18%. I think IBM will be even more aggressive given that they already have sales, service, and marketing organization. There is nearly 100% duplicate organization structure bewteen IBM and Sun. Easy pickin's!.
This rumored acquisition is a financial victory for IBM. They get strong product family with an enterprise operating system and solidify their position in many traditional markets (mainframes, Financial services accounts) while expanding their coverage in near ones (HPC, Education, etc).
Mar 19 07:56 AM
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AIG's Blackmail Note
AIG's arrogance is nothing short of appalling. It appears as if their attitude was to take nearly unlimited and undocumented risk due to their size and assumed rescue from the U.S. Gov't.
I normally would never favor nationalization, but given that the government already owns 80% of AIG. This company is basically defunct sans the massive government injections. I say nationalize it and let the government unwind the company in a controlled manner, similar to the RTC in the early 90's.
We then introduce the handsomely rewarded executives to the other branch of the federal government; SEC, IRS, DOJ, FTC. Perhaps these branches can learn more about their business practices. The executives can then spend their bonus on lawyers for the next ten years.
Mar 16 08:44 PM
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