Reports that International Business Machines is in talks to acquire Sun Microsystems is having a positive effect on the company that develops Java software. Shares of Sun rose substantially in European trading after word hit the market that IBM may pay $6.3 billion in cash.
Sources familiar with the matter disclosed the talks to The Wall Street Journal on Wednesday. Sun’s shares jumped from below $3 to around $8 Wednesday morning.
The acquisition by IBM would mean a great deal for Sun, which had a market capitalization of $3.7 billion at the end of trading Tuesday and fiscal 2008 revenue of $13.88 billion.
The Santa Clara, Calif.-based company with 33,556 employees worldwide had been seeking a buyer for some time. HP was approached as a potential buyer, but the company did not have any interest in a deal, the Journal said.
Sun has reached a point where it needs an exit strategy or a transition from hardware to focus more on open-source software and services. For years, the company stood out for its focus on innovation, but it has not had as much success in recent years.
Kristi Rawlinson, a Sun spokesperson, said the company does not comment on market rumors.
The reported talks between the two companies on opposite coasts and with opposite business cultures has ignited debate among observers who see the move as both a big mistake and a way for IBM to stay on top.
Those who see this as a bad move for IBM said the company doesn’t need anything from Sun, including hardware, software, sales or market reach. IBM doesn’t need UNIX, Sun’s chip architectures, its sales force, its storage technology, or Java licensing.
IBM’s access to Sun’s hardware will be a plus for the company that mainly sells software and services, according to…