Oracle Deal Holding Up Sales Of New Sun Servers - Avnet

Uncertainty surrounding Oracle Corp.'s (ORCL) acquisition of Sun Microsystems Inc. (JAVA) is pushing companies to delay replacing aging servers made by Sun, electronics distributor Avnet Inc. (AVT) said Thursday.

Avnet Chief Executive Roy Vallee, speaking at an investor conference in New York, said that the executives that manage corporate data centers have been delaying replacing older devices overall, but the trend has been more pronounced with Sun Micro servers, as few are sure of Oracle's plans with Sun's hardware unit.

Avnet distributes servers and other technology products to a wide range of customers, offering insight into the IT purchasing patterns of corporations.

Chief information officers, the executives charged with maintaining a company's IT infrastructure, normally won't make server purchases without maintenance contracts that can run over several years.

Oracle Chief Executive Larry Ellison has said that he plans to keep operating Sun's hardware business after the merger is completed, but the deal's closing is being held up due to antitrust concerns raised by the European Commission, and Oracle hasn't yet offered a detailed plan for Sun's products.

Meanwhile, International Business Machines Corp. (IBM), Hewlett-Packard Co. (HPQ) and Dell Inc. (DELL) have all launched efforts to poach Sun customers.

Recent data from research firm IDC shows Sun's revenue from server sales fell 37% in the second quarter from the year-earlier period. The overall industry dropped 30%. Sun's server market share dropped as well, while Dell and IBM saw increases in share.

Oracle shares were recently up 4 cents to $22.56. Sun shares fell 1 cent to $9.16.

Sun wasn't immediately available for comment.

-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155; [e-mail]