Sun Micro to buy MySQL for $1 billion

By Duncan Martell

SAN FRANCISCO (Reuters) - Sun Microsystems Inc (JAVA.O: Quote, Profile, Research) said on Wednesday it would buy Swedish open-source developer MySQL AB for about $1 billion to expand into the $15 billion database market, and that preliminary quarterly results showed no impact from the slowing U.S. economy.

Sun shares rose more than 6 percent, which analysts said had more to do with Sun's results easing concerns about its financial services customers than about the acquisition.

Sun and its Chief Executive Jonathan Schwartz have sought to emphasize the company's small but fast-growing software business, which includes the Solaris operating system and Java programming language. If Sun is successful with MySQL, whose database software is used by huge Internet sites such as YouTube and FaceBook, it could mean increased bundled sales of support for MySQL and more hardware sales.

"Sun is looking for new growth engines, and this is one of the areas they're going to try and make a bet on," said Pacific Crest Securities analyst Brent Bracelin.

Schwartz said in an interview that Sun was not seeing less interest in the Internet from consumers due to the U.S. economic slowdown, and pointed to 7 percent growth in its bookings for the December quarter.

"In times of recession, companies look to technology to drive efficiency," Schwartz said.

Forrester Research analyst Mike Gilpin said the acquisition was not so much about going head to head in the database market with Oracle Corp (ORCL.O: Quote, Profile, Research) or IBM (IBM.N: Quote, Profile, Research), but about strengthening its position in helping to run the Internet.

"This is Sun girding its loins for battle against Microsoft in terms of who's going to run the Web," he said.