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It Looks Like Google’s Buying Sun After All

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Now The New York Times’ Deal Book has picked up on my Google-Sun analysis:

The prospects that search engine giant Google is due to buy the U.S.’s most sophisticated hardware company “have been swirling around trading floors and Silicon Valley for more than a week,” reports the credible periodical in the Deal Book’s blog. “Shares of Sun, which has a partnership with Google to develop and distribute each other’s technology, spiked up about 4 percent last week as a result of the rumors.”

The analysis is making a serious impact upon the market, and now I have received an e-mail from an inside source in corporate finance who wishes to remains anonymous for the time being.

First though, a re-cap and more information on the analysis:

Is Google About To Buy Sun Microsystems?: this article originally appeared on Iowa Voice, the U.S.’s largest Republican blog where I am a Guest Author, and started all the speculation.

Will Google Buy Sun Microsystems Part II: a further look at the increasing liklihood that Google will buy Sun Microsystems

Does personal e-mail from Sun exec reveal Google is about to buy Sun Microsystems?: this, on the Biz/Tech watch Featured Column here at Blogcritics, was the ultimate clincher, drawing in thousands of readers, and moving the price of Sun Microsystems up by $500 million in four days.

The prices of Sun and Google are moving further and further apart, too, as the market is realising what may be truth in the rumour: at close of trading yesterday, Sun was up and Google was down again, a rare phenomenon by any standards.

The New York Times’ Dealbook blog is the most authoritative source of financial information on Wall Street, and the very fact that my comments — name attributed — have appeared there adds a phenomenal sign of credibility.

And there is more food for contemplation. Last weekend I had an intense conference call with analyst Mark Stahlman. Stahlman is brash, arrogant, hard-hitting and strangely compelling in his convictions; he has the voice of a converting zealot, and you can hear the persuasive overtones of that conviction even as he listens acutely to what you say. Stahlam is Wall Street’s largest tech analyst: this is the man who introduced Eric Schmidt to Wall Street deal-makers when Schmidt was a mid-level hardware manager working late nights over a plasma screen, Starbucks in hand. He was also the one who put out the financial projection for Google, famously adopted by the company itself that it would “one day become a $100 billion company”. The analysis confused many — as Google currently stands at that valuation anyway — but the reason was simply because it did not come from them: it came from the zealot. A man who regularly wines and dines with Schmidt — Stahlman is closer to the action than any.

“Google is going into Financial Services and Healthcare!” he exclaimed over the lengthy conversation. “This is the last stage of the Java project!”

If Stahlman’s consensus that Google’s foray is indeed into “last stage of the Java project”, then the company is going to need massive hardware storage to develop this capability — financial services and healthcare is no small-time show. The logic is obvious when one considers where the highest consumer cost burdens and pending technological disruptions currently lie — with a huge round of technology combining software and hardware, the scenario of practically free financial services and healthcare all delivered to the front door looks suddenly feasable. (E-mail me if you want a copy of the analysis). In a strange twist, such moves are totally consistent with Bernstein’s political analysis in his excellent and radical new book The Capitalist Manifesto.

The move is not right for Google as it stands alone, but is perfect when one considers hardware to provide the engine for the G-drive platform. Here is a leaked powerpoint surreptitiously embezzled by Google moments after they realised they had made the mistake of releasing it. I have located a copy. (Again, E-mail me if you want a copy).

A corporate finance executive close to the action who wishes to remain anonymous e-mailed me shortly afterwards with the revelation that the takeover will probably involve 35 shares of Sun for 1 of Google’s and that my analysis was “spot on”. At this point I am not at liberty to share any more of the e-mail, but by all accounts, Google is Sunny.

GoogleOS may be coming sooner than we think.

*UPDATE Important Disclosure*: i do not have a license to promote stock, and am in no way promoting anything. I do not personally own any shares in Google or Sun Microsystems, neither am I acting in concert with anyone who does. The article is intended as investigative journalism only and is in no way a solicitation to buy or sell securities or even a publicity campaign for certain securities. In other words, just read, blog and comment about it: that is all!

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About Daniel M. Harrison

  • http://desicritics.org Aaman

    Inside source to which company? Do you have any personal interest in this transaction?

  • http://www.matrixwebdev.com Mike Siley

    “last stage of the Java project” what in the world does that mean.

    Ya, they use Java, and C++ and Python and … What does a programming language have to do with buying Sun?
    Sun doesn’t own Java. It’s owned by the ‘community’
    (well sorta, not like Open Source but more like a group of companies that have interest in it.. if I remember correctly).

    A company like that won’t be tied to any one language.
    The problems are too complex and need to be solved
    with best language for the job.

    Anywho… here’s my analysis. Google will not buy Sun. Reasons,
    1) Google likes cheap commodity hardware not high end servers.
    2) Google is in the software biz, not hardware, and there is no reason it needs to be in the hardware biz when there are a bunch other companies that are competing in that market.
    It would be a competitive disadvantage to buy Sun since then they would be politically stuck with Sun hardware even if another hardware would be better.
    3) There is little if any competitive advantage to using Soloris over Linux/BSD.

    Also, Google will not go into Fin. Serv. and Healthcare.
    That’s all just silly talk. What competitive advantage do they have over a Merrill Lynch or a United Healthcare? None.

    Google is an online services provider that makes money via ad revenue (e.g. Search with AdSense) and data services (e.g. KeyHole Google Earth).
    They will continue to do this in various formats.
    This is their core competency.

    I remember this type of exuberance a few years back…
    oh ya then the Dot Com crash came along.

  • spif

    If in fact the SEC is interested in your writings, they may be building a case against you for stock manipulation.

  • http://danielmarkharrison.blogs.com Daniel M. Harrison

    “If in fact the SEC is interested in your writings, they may be building a case against you for stock manipulation.”

    Glad you brought this up actually:

    These articles are purely journalistic and should not be interpreted any other way, as I have consistently stated on my own blog.

    I do not own nor am I acting in concert with anyone who own shares in Google or Sun Microsystems. In other words, I have nothing at all to gain from any price increases or decreases – if my articles make for popular reading, there is little I can do about that.

    Again, thanks for flagging that one up.

  • http://w6daily.winn.com/ Phillip Winn

    THanks for clearing that up, Daniel. You might want to add a disclaimer about not owning any Google or Sun stock and so on to these types of articles. If you’ve single-handedly driven the price of SUNW up as it appears you might have, well, the SEC would indeed be interested. 😉

  • http://danielmarkharrison.blogs.com Daniel M. Harrison

    Philip: Have done – fantastic idea. To be honest, I’m amazed at all the interest … my personal log had about 1300 hits today and these articles always go straight to number one. It’s obviously a theme I have developed as my readers have come to see more but I never intended for it to be potentially taken so serously by the financial community. Thanks for the recommendation.

  • BJ

    Your article made it on digg.

  • loosenut

    “Stahlam is Wall Street’s largest tech analyst”

    Never heard of him. Is he like, the next Henry Blodgett or something?

    Anyone who is interested in what really happens when wall st. tech analysts buddy up with corporate executives can see it all here:

  • Nerdler

    “Google is going into Financial Services and Healthcare!”

    This is unbelievably asinine.

  • You’re still at it?

    All of these blog entries have been pretty much void of any coherent analysis, logical reasoning, or even faint evidence that such a deal was even ever under consideration. You did an excellent job driving up traffic to your site and getting your name yammered around town by those who don’t understand how to read or think critically, though. Congratulations. This entire premise and the ongoing blog entries are entirely absurd.

  • http://markbnj.blogspot.com markbnj

    Daniel. Very interesting. Do you read Bob Cringley’s blog? He had a series of Google articles that I excerpted here:

    this article does show the original posts too.

    But in a nutshell,
    Google has (all these are ALLEGEDLY) purchased:
    Dark fiber, all across the country
    perfected the data center in a trailer
    allegedly perfected the concept of inserting locally produced and inserted commercials into live tv (via the local POPS)

    Now your suggestion could VERY very well fit right in with this.
    If google had a HW brand (say SUN) then they could
    use their own label machines in all those racks of data center trailers.

    And they could also nicely fit financials and health care into these distributed data centers (in the parking lot of the RBOC’s POP!)

    IT’s quite interesting!

  • http://www.7diesel.com Diesel

    it’s amazing to see how interested people are in what google may or may not do. i have a feeling we’re witnessing history being written (and daniel m harrison has made a fine job with the pen). keep up the good work d!

  • ologge

    Maybe try reading “Google is going into Financial Services and Healthcare” not as Google providing what Merrill Lynch or a United Healthcare already are, but a) going off on a tangent to the standard service and/or b) providing some core functionality to the existing players in those markets… and you may get some interesting ideas.

  • JRoberts

    Last time I checked google is not a software company. I don’t think there is even a piece of software that is sold by google. Google is ad base driven in terms of profits. There doing great now, but they need another leg to stand on.

  • Ken Edwards

    EPIC and the Google Grid are not far off!

  • Vincent Clement

    “The New York Times’ Dealbook blog is the most authoritative source of financial information on Wall Street, and the very fact that my comments — name attributed — have appeared there adds a phenomenal sign of crediility.”

    Ass kissing does nothing for your credibility. Nor does citing the fact that the NYT cited you by name. You have to earn not sell credibility (you also have to spell it correctly).

  • http://www.myspace.com/warsmith31 nicholas barbati

    where the dudes email
    i would appreciate it if anyone could email me the stuff he mentioned in his blog
    to [Personal contact info deleted]
    much appreciated
    thanx

  • http://www.virtualdissent.com this

    lol, financial services and healthcare? are you kidding?

  • Rode Richen

    Actually, the real “inside story” is that Google is actually moving toward acquiring the rights to the Beatles’ song “Here comes the Sun” and are in intenses negotiations with Michael Jackson who owns the rights to the Beatles’ music.
    It wants to use the music and lyrics in a new ad campaign to promote its open office offering coming soon.