Friday, June 03, 2005

Recovery through genocide?

Good freakin' Lord. Why not just lay everyone off while they're at it? History may or may not show Sun's acquisition of StorageTek to ultimately have been a good move. I think it's potentially a significant win but won't be easy to pull off. (See my comments at IBD and ZDnet. My Illuminata colleagues have also posted in a similar vein.) But, whatever the doubts and concerns about the StorageTek approach, getting rid of all Sun's employees hardly seems a viable recovery strategy either.
"We do question the rationale of a transaction which reduces Sun's cash hoard by 40 percent, and does nothing to re-ignite revenue growth or profitability," Steven Fortuna, an analyst at Prudential Equity Group, said in a research note. "We would rather have seen the company buy back a billion shares and fire 10,000 people."

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