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Linux vs. Unix Values Evident in Red Hat, Sun Market Valuations

Jan 28, 2009, 15:04 (1 Talkback[s])
(Other stories by Paul Reubens)

"Ask the market (and remember the market is not stupid, at least not in the long term), and the answer is that they're both worth about the same: Both companies are currently valued by the market at about $2.7 billion. (Actually Red Hat is worth more than Sun today -- which is a story in itself.) Sun's value has been dropping like a stone over the past few months, while Red Hat's has been soaring -- almost doubling since mid-November. Today it's up almost 2.5 percent.

"There are a number of reasons for Sun's declining share price that have been widely discussed. It's not clear where Sun is going to make money in the future, in particular how or whether it will monetize its open source software and whether open source developers will drive sales for its systems and services. There's probably also a feeling on the part of the market that Unix is not "where it's happening." Since Sun has cash reserves of roughly the same as its market valuation, the market is essentially valuing the entire Sun business at nothing."

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