Sun Microsystems Inc could be forced to sell itself or some of its assets as the economic crisis worsens problems facing the high-end computer maker, which has been struggling since the Internet bubble burst in the early 2000s.
But tight credit markets and the challenge of valuing Sun’s intertwined software, hardware and services businesses could put off potential buyers such as rival server makers Hewlett-Packard Co, International Business Machines Corp and Dell Inc, bankers and analysts say.Last month, investment firm Southeastern Asset Management disclosed that it had become Sun’s top investor with a fifth of its shares, and said it might go around the technology company’s board to talk to “third parties” about alternatives.
Other investors like private equity firm Kohlberg Kravis Roberts & Co may also support a sale to recover their money. KKR holds a seat on Sun’s board and had to write down the value of its $700 million debt investment in the company.
“I have not seen a convincing strategy laid out by management,” said Shebly Seyrafi, an analyst with Calyon Securities, adding that Sun may be pressured to split up the company if management failed to turn around the business.