JAVA: IBM in reportedly in talks to buy Sun Micros

Analysts said technology companies were looking to acquisitions as organic growth was difficult given the poor economy.

“Plus, valuations are also very cheap now,” said Tarun Sisodia, a technology sector analyst with Indian brokerage Anand Rathi Financial Services. “It’s a good time to pick up the companies that can contribute to your growth in these difficult times.”

This and the amount of cash IBM has are probably two huge factors in the purchase. Should be interesting to see IBM transform itself yet again.

well i think that such low stocks are good opportunities for investors like me who couldn’t afford it a few years back. With prices so low they are worth it as long as they don’t tank.

sadly by the time it reached my ears it was already news rather than rumour. I need to keep my ear to the ground to catch these marginal increases, a 30% jump is something is the type of quick rallies i like to jump on.

Yeah its hard to know when to sell. However the way I look at it, most investors would be buying and driving up the price based on the rumours so it can’t go much below the price I bought it at.

Sun Microsystems Inc. shares plunged as much as 24% Monday following reports that the company’s board of directors turned down a proposed IBM Corp.’s acquisition offer of $7 billion.

However, the deal may still get done. The online edition of the Wall Street Journal reported that Sun’s board has split into two factions that are divided over a variety of issues. Both the WSJ and the New York Times reported that Sun’s board rejected a formal acquisition offer by IBM of $9.40 per share on Saturday, sending a notice terminating Sun’s agreement to negotiate exclusively with IBM.

Oracle Corp. on Monday said it will buy Sun Microsystems Inc., creator of widely used Java software, in a $5.6 billion, all-cash deal that unites two of Silicon Valley’s most storied technology companies.

The deal with Oracle comes shortly after IBM reportedly ended its own bid to buy Santa Clara, Calif.-based Sun the acquisition puts the company squarely in the mix for providing a complete suite of technology products used in corporate data centers — a market that is also being aggressively courted by heavyweights such as Microsoft, Hewlett-Packard and Cisco Systems.

“This kind of rounds out Oracle’s data center offering; all of these big companies are heading in that direction,” said software analyst Brendan Barnicle of Pacific Crest.

Though the deal puts Oracle into the hardware space for the first time, the company’s main target was Sun’s Java software business as well as its Solaris operating system, which is used for mainframe computers.

In a statement issued Friday, Dan Wall, an attorney representing Oracle, said that the software giant was “almost able to resolve everything” with Justice Department regulators before a deadline for a second request for information.

Such second requests for information often involve divulging additional information to regulators keen on taking a closer look at a planned merger — in what can be a time-consuming process.

“I fully expect that the investigation will end soon and not delay the closing of the deal this summer,” Wall added.

A Justice Department spokeswoman did not immediately respond to a request for comment.

According to a disclosure filed by Sun with the Securities & Exchange Commission earlier this month, Oracle refiled its initial premerger notifications for the deal with the Justice Department and Federal Trade Commission in late May, effectively restarting the automatic period of antitrust review that all mergers are subjected to.

That initial period expired Friday.

Sun spokeswoman Karen Kahn declined to comment, saying only that the initial antitrust review “has not yet expired as far as we’re concerned.”

Often, companies refile their initial notification if they feel it will give them a better chance of avoiding a second request for information, or at least of narrowing the scope of any forthcoming second request.

According to the statement by Oracle attorney Wall, regulators have asked for more information specifically about the licensing of Sun’s Java software.

David Turetsky, an antitrust attorney with Dewey & LeBoeuf in Washington, D.C. and a former deputy assistant attorney general for antitrust in the Clinton administration, said the interest in so-called “vertical integration” issues related to Oracle’s Java, which has been melded into the technologies of a number of Oracle competitors, would be unsurprising.

“The [antitrust] agencies have signaled that they intend to look carefully at vertical issues in mergers,” Turetsky said.

Predicting the outcome of a confidential Justice Department antitrust review is nearly impossible, Turetsky cautioned. Yet he said that when Oracle’s merger with Sun was proposed, “the general feeling was that it was likely to be able to be done as proposed.”

“That’s not to rule out the possibility of some sort of divestiture,” he added.