Sun Buys Bits Of Critical Path

With the acquisition, the California-based networking giant plans to incorporate Critical Path's assets into its Solaris Operating Environment.

by Michael Singer of siliconvalley.internet.com [September 28, 2001]

As part of its strategy to beat rival IBM in the server marketplace, Sun Microsystems Tuesday says it has acquired the mainframe rehosting business of Critical Path.

The acquisition, code named "Blue Toast," includes some of Critical Path's non-core technology and software such as its InJoin TRANS, BATCH and PATH3270 products.

With the acquisition, the Palo Alto, Calif.-based networking giant plans to incorporate Critical Path's assets into its Solaris Operating Environment. The idea is to save IT organizations money by migrating from costly mainframes to Sun servers while preserving their existing CICS applications.

Fortunately, all of San Francisco-based Critical Path employees related to this business were hired by Sun as part of the agreement.

In harmony with the acquisition, Sun also unveiled its Sun Fire 15K UNIX server computer designed to keep Big Blue at bay in the realm of servers.

Even though IBM makes more computer-servers, it lags behind Sun and Hewlett-Packard in the UNIX server market.

"Bottom line, this dramatically strengthens our competitive position against IBM," Sun executive vice president John Shoemaker told the crowd at an event in New York, Tuesday. "Mainframes are old technology, and this new tech from Sun is two to three more times more powerful than the largest mainframes."

Specifics
Financial terms of the Sun-Critical Path cash deal were not revealed, however Critical Path is in the middle of a restructuring, the result of a decrease in software license sales, offset by the termination of several employees. The company's revenues in a six-month period decreased 7 percent to $54.2 million.

Critical Path says its problems stem from the announcement of sales of licensing agreements that should not have been booked, or allocated to other periods. Trading was halted on Feb. 2, pending preliminary investigation and did not resume until adjusted figures were posted on Feb. 14th.

The charges have resulted in several class action lawsuits, a SEC fraud investigation, layoffs and mounting losses.

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