Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

IBM's Continued Path of Expansion

Companies / Tech Stocks Mar 24, 2009 - 12:24 PM GMT

By: Oxbury_Research

Companies Best Financial Markets Analysis ArticleOn Wednesday, shareholders of Sun Microsystems (Nasdaq: JAVA) saw their investment surge more than 75% as reports surfaced that the company is in talks to potentially be acquired by International Business Machines (NYSE: IBM). Shares of IBM moved up 2.8% on the news.

The purchase is likely to cost IBM at least $6.5 billion and could happen as early as this week if the company's talks are successful. Such a deal has the potential to be IBM's largest single acquisition; eclipsing its $4.9 billion purchase of Cognos last year.

Despite the fact that Sun is coming off of a second-quarter loss $209 million, this acquisition would make sense for IBM in the long-run. In recent years, the company has been buying up software companies and moving out of hardware. In 2005, IBM sold off its personal computer business to China-based Lenovo Group for $1.25 billion. This deal would allow IBM to rebuild its hardware portfolio. It would also be welcomed by Sun Microsystems as the firm has been seeking a buyer in recent months, but was reportedly turned away by Hewlett-Packard (NYSE: HPQ).

The timing of this move by IBM appears to be ideal as well. The company has been one of the more resilient components of the Dow throughout the market downturn. IBM is only trading 16.3% below its level from a year ago, yet the Dow has fallen more than 36.2% during the same time period. Sun shares have been battered to the tune of more than 50% over the course of the past 52 weeks, which makes this potential purchase all the more attractive and feasible.

Should this transaction ultimately occur, IBM will be throwing down the gauntlet to Cisco Systems (Nasdaq: CSCO) in the server business. Last week, the networking behemoth, announced its plans to break into the $55 billion server market with the unveiling of its Unified Computing System. However, a Sun/IBM combination would allow IBM to answer this challenge with a splash as well as augment its position as the market leader in the server market. Statistics from the research firm IDC show that IBM had 31.4% of the server maker market last year. Following IBM was H-P with 29.5%, Dell (Nasdaq: DELL) at 11.6% and Sun with 10.6%.

As far as potential trades go, the horse is already out of the barn with respect to Sun. Taking a long position on Sun would only prove risky at this point should the deal fall apart. The potential long-term growth that IBM could capture out of this deal makes its shares worth another look though.

Billy Fisher
Analyst, Oxbury Research

Disclosure: no positions

Oxbury Research originally formed as an underground investment club, Oxbury Publishing is comprised of a wide variety of Wall Street professionals - from equity analysts to futures floor traders – all independent thinkers and all capital market veterans.

© 2009 Copyright Oxbury Research - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Oxbury Research Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


michael jackson died
26 Jun 09, 07:50
michael jackson died

michael jackson dead 2009

Post Comment

Only logged in users are allowed to post comments. Register/ Log in