The talks between IBM and Sun Microsystems have broken down, and it looks like the $7 billion acquisition of Sun by IBM isn't going to happen. According to today's Wall Street Journal, Sun rejected the offer over the weekend, and terminated Sun's agreement to negotiate exclusively with IBM. Meaning, perhaps, that they're still looking for a buyout? The Journal also noted that IBM has withdrawn its offer to buy Sun.
Apparently, McNealy was opposed to the idea, while Sun's CEO Jonathan Schwartz was in favor.
It seems stockholders are none too happy about the deal. As of this writing, Sun's stock is down to $6.53, after closing at end of market Friday at $8.49, enough of a decline to give traders a Monday morning headache. During the negotiations, Sun had agreed tentatively to a per-share price of $9.55. Could be that the shareholders will put pressure on the company to open back up negotiations.
So what does this mean for Sun, and more importantly, for Sun channel partners? Sun doesn't currently have any other companies in line for a buyout--at least that we know about. Sun customers or potential Sun customers may start to worry about Sun's continued viability. Whether it's a legitimate worry or not is besides the point, this is a market that rises and falls based on perception more than reality. Who will buy Sun equipment, when there is the possibility out there that it will still be acquired by someone else later on down the road? Or more to the point, what resellers will want to sell Sun any more? The fact that Sun recently laid off 1,500 people adds fuel to the fire. Of course, everybody is laying off people these days, so that Sun has done so as well is no indication that they are doing any worse than the rest of the industry. Nonetheless, there is plenty to worry about here, and we'll be keeping a close watch on developments.