Oracle staying mum on merger progress down under

Oracle's Australian representatives are staying mum over the impact attempts to acquire Sun Microsystems are having on its operations down under.

The two companies are expecting the European Commission to clear the path for the deal this month, after first announcing the $US7.4 billion tie-up in April 2009 and obtaining approval from the US Department of Justice (DOJ) in August.

The European Commission opened an in-depth investigation into the takeover, citing "serious concerns" about the deal's effect on competition in the market for databases, thereby delaying approval of the deal.

Oracle co-president, Safra Catz, said in a statement last month that the company expects the go-ahead for the merge by the European Commission’s January 19 deadline.

“We expect the European Commission to unconditionally clear the acquisition of Sun in January,” Catz said. “I want to thank all of our customers for the overwhelming support they have given us during this process.”

IBRS advisor, Dr Kevin McIsaac, thinks local market is still grappling with uncertainty over the integration and the announcement has slowed sales.

“Sun have not been in great shape for many, many years,” he said. “I was talking to a large client who relies heavily on Sun’s Integration Solution, and they’re really trying to come to grips with what could happen to that particular product if or when the purchase goes through.”

IDC analyst, Matt Oostveen, said even though it’s too early for Australian customers to know exactly what they’re dealing with, he expects the large clients to remain loyal because of the scope of their investment in the infrastructure.

“They’ve made big investment with Sun and they’re going to continue with Sun to try and get some value out of the investment,” he said. “They’re not going to start ripping out Sun equipment over the next couple of years.”

“We don’t know, nor does the customer base know, what this new entity will be like and they’re not going to say ‘no’ to it until they at least know what it’s like to deal with.”

Despite being hit by the economic crisis in early 2009 and dropping head count in the July to September period, including in the Asia-Pacific region, Oracle reported a strong second quarter of its 2010 fiscal year, with earnings of $US0.29 per share, an increase of 15 per cent over the same period last year. Total revenue jumped 4 percent to $US5.9 billion.

Sun's fate, however, has not been as lucky — it has been losing $US100 million a month while it awaits approval for the deal, Oracle chief executive officer, Larry Ellison, said in September.

In October, the future of Australia’s Sun Microsystems staff was left uncertain after the vendor announced it would layoff 3000 employees across its global workforce over 12 months. The cuts were the second for the year, after Sun said it would drop 1500 in March.

Both companies have declined to comment on the impact the delay in securing approval for the deal is having on their Australian operations.

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