Somehow the people who run Southeastern Asset Management got it into their heads that Sun Microsystems (JAVA) is a good investment. Southeastern now owns $1 billion of Sun stock. According to the The New York Times, most of that has been purchased since March.

Since Sun is down over 40% in the last six months, Southeastern may already be taking a beating. The money management firm says it likes the Sun stock buy-back program and its move toward using open source software.

Quite frankly, no matter how positive those aspects of Sun’s situation may be, it is a dead company, Revenue is almost flat and is expected to stay that way for the next few quarters. The firm does little better than breakeven.

Sun’s stock is down because it is being pushed and priced out of it core server business by larger companies like IBM (IBM) and HP (HPQ). It would be nice to believe that one of those firms would buy Sun for its market share. Even with JAVA near a 52-week low, there are no offers.

The competition must feel that Sun is so crippled that buying it is not worth the expense.

Douglas A. McIntyre