Sun Microsystems (SUNW) stock is in the shadows -- down from 5.55 in November to 3.54 on Apr. 27. Although the steep sales slide is over, most analysts are still cool to Sun. But maybe not for long. CEO Scott McNealy is considering taking Sun private with the help of Silver Lake Partners, says a hedge-fund manager close to McNealy and the private equity fund. Silver Lake has done LBOs for Seagate Technology (STX) and SunGard Data Systems (SDS).
This manager sees an LBO offer of $5 to $5.50 a share. Sun's cash stash of $7.5 billion, or $2.50 a share, makes an LBO doable, he says. The idea is to shrink Sun by selling assets, bolster its core hardware, software, and service businesses, and go public again. Spokespersons for both Sun and Silver Lake declined comment.
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
By Gene G. Marcial