IBM has opened acquisition talks with Sun Microsystems, raising the prospect of a massive consolidation of the software, server and storage markets.
According to the Wall Street Journal IBM has mooted a price of $6.5bn. Sun is currently capitalised at $3.7bn ($4.97/share), but its share price has persistently fallen since the heady days of the dot com boom and has under-performed that of its computer systems competitors over the last few years, making it a much less expensive purchase now that it would have been three or four years ago. Legions of long-term Sun investors who have seen the value of their Sun holdings decline drastically will breathe a huge sigh of relief as they see the potential to make some money at least.
Any deal would likely bring very close scrutiny from regulatory authorities, given both firm’s roles in the server, storage and systems software markets.
The Journal goes on to claim Sun has been hawking itself around the industry recently, looking to be bought, with HP also mentioned as one potential sugar daddy. If true, this confirms the perception that Sun has been impoverished by CEO Jonathan Schwartz’s strategy of moving into open source software and relying for revenue growth on converting Solaris, Java and MySQL developers’ into purchasers of Sun’s servers, storage and services.