IBM-Sun Deal Collapses, Sun Stock Drops 23%

by Jordan Yerman | April 6, 2009 at 08:03 am

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The highly-anticipated IBM buyout of Sun Microsystems has fallen apart. Sun's execs were unable to present a unified front, ultimately unwilling to proceed without additional guarantees from IBM.

The deal's collapse puts Sun's future in flux, since its announced business plan focuses on cloud computing; many potential customers would have a problem with storing their data remotely with a company that's actively seeking-- and failing to find-- a buyer.

Oh, and Sun's stockholders will be most displeased, since Sun performed a stock split in anticipation of the merger, i.e. counting chickens before they're hatched.

Sun will tell its customers that the IBM deal was just a slight detour and that the company’s plan to be a pivotal hardware, cloud computing and software provider remains intact. The big question is whether customers will buy Sun’s talk—not to mention Sun’s gear. For shareholders, Sun has to explain why it split over the IBM offer.

The collapse of what would have been the biggest technology deal of the year increases pressure on McNealy to find another suitor as the server maker heads for its biggest annual loss in six years because customers are cutting orders.

Also see: Is IBM to Buy Sun?

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