Sun: Now What?

I was never happy about the prospect of the IBM-Sun merger, and am glad to see that the deal has fallen through. But the question now looms even larger: what happens to Sun next?

I had said earlier, on the day the deal rumor was leaked, in fact, that Sun should hold on to its OpenSource business, and divest the hardware business, and thought that Cisco may be interested in buying the DataCenter business in particular. I am pretty much going back to that recommendation for Sun.

I have a different concern at this point though, based on a discussion we’re having on my blog on value creation versus value destruction: “One of the problems that we have with Wall Street compensation is that traders make money both as the market goes up and as the market goes down. I have been thinking about the short-selling issue for a while, and have pretty much come to the conclusion that short-selling needs to be banned. No one should be making money if a company’s stock is going down. And especially, no one should have the incentive or the tools to bring a company’s stock price down.”

If you read this discussion and the multiple points of views it has been capturing, a top of mind concern would be that short sellers would now completely tank Sun. It doesn’t take a rocket scientist to see that Sun is in trouble. Deep trouble. Normal investors, under the circumstances, would make logical decisions based on that knowledge. Why do we need the short-sellers to descend on the stock now, in addition to the natural buy-sell behavior that is inevitable?

I would like to hear the various points of view out there on the topic of banning short-selling – both in favor and against. Please comment here.

This segment is a part in the series : Sun