McNealy Mulls Taking Sun Private

Scott McNealy is considering a plan that would take his beloved Sun
Microsystems off the market at least for a while,
according to a report published Thursday.

A hedge-fund manager with ties to McNealy and venture capital firm
Silver Lake Partners told Business Week that Sun’s CEO and co-founder is
talking to investment managers about a leveraged buy-out (LBO). The
financial transaction would mean Sun’s management would repurchase all
public shares and take the company off of the publicly traded markets.

A spokesperson for Sun declined to comment on the report. Silver Lake
executives were not immediately available to respond.

The transaction would more than likely trigger substantial debt until
Sun had a chance to evaluate its business and take action. The
hedge-fund manager told reporters that Sun could take the time to sell
off some of its assets, reinvest in its hardware, software and services
business, and go public again.

Silver Lake has experience in LBOs, having done the same for storage
and hard drive manufacturer Seagate Technology and
financial services software vendor SunGard Data Systems .

The hedge-fund manager also said the timing is good for Sun to pull
off an LBO, considering the company has $7.5 billion in cash reserves.

Sun’s stock is now less expensive, having slid down from $5.55
per share back in November 2004 to its closing price Thursday of $3.44.