Hardware News

McNealy shoots down Sun buyout rumours

Stephen Shankland CNET News.com

Published: 29 Apr 2005 17:10 BST

Sun chief executive Scott McNealy is pouring cold water on a rumour that suggested an investment firm planned a leveraged buyout of the server and software company, calling it "unsubstantiated" and part of a scheme to profit from a stock price boost.

BusinessWeek on Friday quoted an unnamed hedge fund manager as saying McNealy is considering taking Sun private with the aid of Silver Lake Partners, an investment firm that bought out Seagate Technology and eventually relaunched it as a publicly traded company. According to the BusinessWeek report, the manager foresaw a price of $5 to $5.50 per share, well above $3.44 the stock closed at Thursday.

In an email Friday, McNealy said the rumour is part of scheme to profit from an increase in Sun's stock price, which had risen 36 cents, or 11 percent, at 8 a.m. Pacific. The stock had traded higher earlier Friday.

"Why would a supposedly credible rag like BusinessWeek quote an anonymous hedge fund guy on a totally unsubstantiated rumour designed to spike the stock price?" McNealy said. "I will bet this hedge guy is laughing his butt off that BusinessWeek printed this as he profits from the $0.42 rise in the price this morning."

Sun has stopped the deep revenue declines that plagued it for years after its fall from dot-com glory, but the company still is suffering from mostly flat revenue and breakeven profitability.