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IBM to buy Sun, create Linux powerhouse?

updated 09:25 am EDT, Wed March 18, 2009

IBM May Buy Sun

IBM is discussing a deal that could see it buy Sun Microsystems for about $6.5 billion, sources tell the Wall Street Journal. The takeover would be worth twice as much as Sun's current stock value and would give IBM a significantly larger influence on Internet businesses, where both companies' preferences for open-source and cross-platform technologies like Linux and Java would give them better clout against Microsoft's closed software as well as give them further independence from Intel or other x86 hardware.

While an agreement could occur as early as this week, the newspaper cautions that circumstances are still fragile enough that a deal might not take place. Any buyout might also face antitrust concerns over their combined control of the UNIX-based server market and other categories.

Both companies would nonetheless stand to benefit from the deal. Sun has been struggling financially, posting a $209 million shortfall, and has reportedly been shopping itself around larger companies hoping for a merger that would solve its financial problems. IBM itself only has a slight lead over close rival HP in the server market and would hold 42 percent of the field if a deal with Sun was successful. Second-place HP and third-place Dell are the two largest server makers to depend substantially, though not exclusively, on Windows systems.

Neither IBM nor Sun has commented on the claims.



By Electronista Staff
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