Sun server sales crashing as Oracle deal stumbles

Continued delays in the completion of Oracle Corp.'s pending US$7.4 billion acquisition of Sun Microsystems Inc. have put the latter into a limbo that appears to be devastating its computer server business.

The acquisition hit another major roadblock late last week when the European Commission announced that it is launching an in-depth investigation into the proposed deal based on what it called "serious concerns" about how the merger could affect competition in the database market.

U.S. regulators approved the deal last month.

The EC disclosed its latest investigation just days after research firm IDC released a report showing that Sun's second-quarter server revenue plunged by 37% to $981 million, the worst percentage drop of the major server vendors.

Analysts noted that IBM, Hewlett-Packard Co. and other computer manufacturers have aggressively courted Sun customers, offering them migration incentives and other deals that seek to take advantage of the uncertainty surrounding the Oracle deal.

IBM and HP also saw sales decline in the second quarter, but their shortfalls weren't as precipitous as Sun's. IBM's sales dropped by 26% and HP's by about 30%, according to IDC.

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