2009-11-10 20:17:02 -

Fitch Ratings has revised the Rating Watch for Sun Microsystems Inc.'s (Sun - NASDAQ: JAVA) Issuer Default Rating (IDR) of 'BBB-' to Evolving from Positive due to greater than anticipated regulatory challenges from the European Union (EU) that could ultimately preclude Oracle Corporation (Oracle - rated 'A'/Stable Outlook) from consummating its proposed acquisition of Sun. Furthermore, Fitch has withdrawn Sun's

senior unsecured debt rating of 'BBB-' since the company no longer has any publicly traded senior unsecured debt outstanding.

Fitch placed Sun's ratings on Rating Watch Positive on April 20, 2009 subsequent to Oracle's stated intent to acquire Sun for $7.4 billion in cash with expectations that the acquisition would close in the summer of 2009. Despite receiving unconditional approval for the acquisition from the U.S. Department of Justice in August 2009, the European Commission (EC) issued a Statement of Objections relating to the acquisition of Sun by Oracle on Nov. 9, 2009, citing the potential negative effects on competition in the database market from the combination of Sun's open source MySQL database product with Oracle's enterprise database products. Fitch notes the Statement of Objections is a preliminary assessment of the competitive effects of a transaction and the EC has until Jan. 19, 2010 to issue its final decision, which is subject to appeal to the European Court of First Instance.

The Rating Watch Evolving will be resolved upon either EC approval of the acquisition or termination of the merger agreement. If the EC approves the acquisition, Fitch would likely revise the Rating Watch back to Positive since the EC represents the last significant regulatory hurdle remaining. Upon closing of the acquisition, Fitch expects to upgrade Sun's IDR to 'A', which is comparable to Oracle, and withdraw the rating as Sun will no longer have any debt outstanding. In the event the merger agreement is terminated, Fitch believes Sun's IDR would be downgraded by at least two notches given the significant deterioration in the company's financial performance primarily attributable to continued weak demand for information technology hardware amid a challenging economic environment and uncertainty relating to Oracle's proposed acquisition of Sun.

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Fitch Ratings, New YorkJohn M. Witt, CFA, +1-212-908-0673Nick
P. Nilarp, CFA, +1-212-908-0649Media RelationsCindy Stoller,
+1-212-908-0526 cindy.stoller@fitchratings.com : mailto:cindy.stoller@fitchratings.com