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Dell (DELL): Big Loser In Oracle (ORCL) Buy-Out Of Sun (JAVA)

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By Douglas A. McIntyre Updated Published
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Oracle (ORCL) is in the server business now. So are IBM (IBM), Cisco (CSCO), and Hewlett-Packard (HPQ), but those four companies are fairly evenly matched. HP has annual revenue of more than $100 billion. So does IBM. Oracle’s is less at $22 billion, but it has one of the highest operating margins in the software industry. Cisco’s operating margins are nearly as good. And, all four have market caps in the $85 billion to $135 billion range. They all also have highly diversified businesses.

The one other large company in the server business, Dell (DELL), has almost none of the advantages of the others. Its market cap is only $20 billion, a sign that the market does not like its prospects.

Dell had revenue of $61 billion last year, but tiny margins. Its operating income for the period was only $3.2 billion. Dell does have scale in the PC business. It is the No.2 PC manufacturer in the world. Dell is behind HP and IBM in global server market share, and just ahead of Sun. With Oracle’s financial and marketing services, Sun has a good chance to step that share up.

Dell also lacks the diversification that the other companies have. In its last fiscal year, only 9% of its revenue came from IT services, a  core part of the revenue of its rivals.

There is only one big loser coming out of the announcement of Oracle buying Sun–Dell.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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