IBM/Sun Deal Dead

Posted on April 6, 2009

Ashlee Vance and Steve Lohr at the New York Times reported that I.B.M. Withdraws $7 Billion Offer for Sun Microsystems: “On Sunday, I.B.M.’s board decided to withdraw the offer.” Read the article for (sketchy) details.

Is this good or bad? For those of us who didn’t think the acquisition was in the best interest of Sun’s products and communities its positive, but regardless the article rightly quotes: “Sun is now sort of damaged goods,” Peter Falvey, the co-founder of Revolution Partners, a technology-focused investment bank

Damaged goods indeed. Whatever Sun says or does, we know it doesn’t believe in itself and has, in my mind, simply given up. Even if this isn’t the case, Sun’s going to spend a lot of time, energy and money convincing customers that its committed. Sun made a big gamble and they blew it.

Will Cisco rocket into the server business by picking up the broken pieces? Who knows. All eyes will no doubt be on JAVA shares to free-fall on the market open Monday morning.

I will say, if Sun has to be acquired, just please please please don’t let it be HP. 🙂

Additional Thought:

I rarely intend to come off as negative but some times I do… let me propose an alternative reason for Sun’s desire for acquisition.

Many of us believe that if Sun really wants to grow its going to have to radically reorganize, to become lean and mean. This would make its slow, painful, and frequent RIF’s look like a pregame show. It is possible that Sun’s executives hope to avoid these radical cuts through acquisition by a larger entity that can absorb the workforce in order to save as many products and personnel as possible. That is an honorable possibility.