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Monday, March 23, 2009

IBM to buy Sun Microsystems

The sources, who were not authorized to speak publicly on the issue, called IBM's examination of Sun's assets standard procedure. They added that any deal is unlikely to be reached before next week at the earliest.

IBM is still in talks to buy Sun Microsystems Inc and discussions could take several more days as IBM studies various parts of Sun's computer server and software businesses, according to people with knowledge of the matter.

A combination of the world's No. 1 and No. 4 makers of server computers, however, could draw antitrust scrutiny from regulators in the United States and abroad, analysts said this week.

The merged company would hold 65 percent of the $17 billion market for Unix servers, which major companies and governments rely on for critical operations, according to market researcher IDC.

IBM and Sun were the top two players in that market in 2008, with 37 percent and 28 percent respectively. Hewlett-Packard Co was third, with 27 percent.

IBM is examining the terms of Sun's various technology licenses to check for any conflict with IBM's business, the Journal reported on its website. It said a deal could be worth $6.5 billion to $8 billion.

Its ambitions to move into software through acquisitions like database maker MySQL have been slow to produce results and it has failed to fully commercialize the Java software it invented in the early days of the Web.

Some analysts have said that IBM, with greater manpower and more effective management, may be able to make better use of Sun's assets.

Many also have said that they see a potential deal between the two companies as part of a consolidation trend, as IBM and rivals like HP and Cisco Systems Inc compete to offer software, services and hardware based on emerging technologies that can power complex corporate transactions and networks.

Sun shares closed Friday's session down 6.14 percent at $8.10 on the Nasdaq, giving the company a market value of about $6 billion based on about 745 million shares outstanding as of January 30.

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