Oracle Corporation bought an ailing Sun Microsystems in January 2010 for US$7.4 billion. Can Oracle's CEO Larry Ellison turn the once-great company back around?
Ellison says he has already stopped the carnage at Sun, less than four months after the sale closed in January. "Their management made some very bad decisions that damaged their business and allowed us to buy them for a bargain price," he told Reuters.
...In typical Ellison fashion, he took a hands-on approach to the integration, choosing to meet directly with technical managers at Sun as often as four days a week to diagnose its problems, rather than delegating the work to underlings.
...When Ellison started scrutinizing Sun, he says he found plenty wrong: lots of waste among the billions of dollars that had gone into R&D in recent years. The hardware maker had cut back the sales staff that sold its most profitable products, including its business computers and storage equipment, causing sales and earnings to decline. It operated an antiquated manufacturing and distribution system. It regularly sold hardware and software at a loss, sometimes losing more than $1 million on a single deal.
...Ellison says he learned that Sun's pony-tailed chief executive, Jonathan Schwartz, ignored problems as they escalated, made poor strategic decisions and spent too much time working on his blog, which Sun translated into 11 languages.
"The underlying engineering teams are so good, but the direction they got was so astonishingly bad that even they couldn't succeed," said Ellison. "Really great blogs do not take the place of great microprocessors. Great blogs do not replace great software. Lots and lots of blogs does not replace lots and lots of sales."