Apple, Sun in Sale Negotiations, Sources Say
Apple Computer Inc. is in negotiations to sell itself to Sun Microsystems Inc., but the two companies have not yet reached agreement on critical issues, including price and the fate of Apple’s management team, according to sources familiar with the talks.
Apple Chairman Armas C. “Mike” Markkula Jr. told reporters at a news conference Tuesday that “Apple is not for sale” but declined direct comment on any discussions with Sun. The Wall Street Journal reported this week that a deal was imminent and pegged the price at $33 a share in Sun stock, or about $4 billion.
But sources say the two companies have been in discussions since last fall without reaching an agreement. And Sun’s share price has fallen about $5 since word of the possible deal was leaked Tuesday while Apple shares have climbed by about $2, thus altering the calculus of any stock swap.
Apple shares rose 62.5 cents to $32.25 and Sun shares fell 62.5 cents to $43.50 in Nasdaq trading Wednesday.
Apple has long been struggling with a host of problems. Last week it posted a $69-million loss for the fiscal quarter ended Dec. 29, traditionally the best period for personal computer makers. Many analysts believe a sale is now Apple’s only option.
Although companies including Oracle Corp., IBM Corp. and Hewlett-Packard Co. have been named as possible Apple suitors in the past, those companies are no longer interested. An Oracle source said the company now has no interest in Apple, as did a Hewlett-Packard insider. Although Sun’s reported offer for Apple is seen as a low price, Apple’s options are clearly narrowing.
Sun declined to comment on the negotiations. Chief Technology Officer Eric Schmidt sang the praises of Apple, calling the company “enormously underappreciated” and adding, “Depending on who Apple allies with, its future could be very good.” But he declined to say whether Sun would be that ally.
Sources said one thorny issue in the Apple-Sun discussions is what becomes of Apple’s executives. Sun, considered to have strong management, is not interested in taking on very many Apple managers.
Apple Chief Executive Michael Spindler has a contract that contains severance provisions calling for him to receive as much as $1 million, or one year of his current salary; $3 million for the purchase of his home; and moving expenses.
