Sun shares surge on 'joke' that firm will go private
Shares of Sun Microsystems shot up more than 10 percent Friday and then held some of the gains on speculation that management is looking to take the company private. CEO Scott McNealy told one organ that such rumors were much closer to fiction than truth.
In a gossip column, BusinessWeek cited a "hedge-fund manager close to McNealy" as saying that Sun was hoping to work with Silver Lake Partners to push Sun private with the aim of reemerging one day as a leaner, meaner public company. The rag cited an LBO (leveraged buyout) offer of $5 to $5.50 a share for Sun.
Sun's former president and current Motorola CEO Ed Zander was recently a managing director at private equity fund Silver Lake Partners.
Such ties, however, shouldn't be grounds for believing the hype, according to McNealy.
"Why would a supposedly credible rag like BusinessWeek quote an anonymous hedge fund guy on a totally unsubstantiated rumor designed to spike the stock price?" McNealy asked CNET. "I will bet this hedge guy is laughing his butt off that BusinessWeek printed this as he profits from the $0.42 rise in the price this morning."
McNealy did not respond to our request for comment at the time of writing.
Sun's President Jonathan Schwartz was even more blunt in an interview with the AP.
"It's a complete joke," he said.
Shares of Sun have languished between $3 and $5 over the past couple of years as the company has struggled to post profitable quarters. Sun's quarterly revenue has fallen dramatically from the dot-com boom times, and it is now trying to replace some lost Unix server sales with new sales of x86 hardware.
For a long while, rumors circulated that Sun was a potential takeover target, but such speculation largely died down. McNealy made it clear that he was prepared to stick with the company he co-founded for the long haul. Sun has more than $7.5bn in the bank, which puts it in a relatively strong financial position despite stagnant sales.
Shares of Sun were still up more than 7 percent at $3.70 at the time of this report. ®
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