I know Jonathan Schwartz, the CEO of Sun Microsystems pretty well and think he is one of the smartest executives in the Valley. It's not clear to me yet whether Sun will ever be the thriving business it once was, but I think he has done an admirable job digging Sun out from its hole. More importantly Schwartz has started rebuilding Sun's reputation as an technology innovator. It's stock is up 50% in the last six months, and it just posted its first profitable quarter in more than a year.
So what is Schwartz doing getting in bed with the sharks at KKR for $700 million?
Schwartz told reporters it was an "opportunistic" investment and
that "Sun certainly doesn't need the money." That appears to be true.
Sun has $4 billion in cash.
So why else would a company like Sun, with so much cash, agree to a
nearly $50 million annual interest bill and to give up nearly 3% of
itself in seven years? Could it be that Schwartz likes Henry Kravis'
and George Roberts' Rolodex? Nah. We all know that Sun, with a stock stuck below $6 a share for four years, isn't for sale -- right Jonathan?