NEW YORK â Sun Microsystems Inc. shares soared Wednesday after a published report said International Business Machines Corp. is in preliminary talks to buy Sun for at least $6.5 billion in cash.

The Wall Street Journal, which cited unnamed people familiar with the matter, said the deal could occur as early as this week. It also said the talks could fall apart.

Sun Microsystems shares climbed $3.09, or 62 percent, to $8.06 in morning trading, while IBM lost $2.77, or 3 percent, to $90.14.

Sun Microsystems, of Santa Clara, Calif., employs 2,185 people at its Broomfield campus, following a layoff of nearly 200 workers in January.

IBM, of Armonk, N.Y., is one of the largest employers in Boulder and Broomfield counties, with 2,800 employees. Last June, IBM opened a $350 million data center on its Boulder campus.

IBM and Sun both make computer systems for corporate customers, and the newspaper said a purchase of Sun would help IBM in the finance and telecommunications markets.

An IBM spokesman did not return calls seeking comment Monday morning. Sun spokeswoman Karen Kahn declined to comment.

While some of their technologies and customers overlap, IBM and Sun have been heading in different directions for most of the past decade.

Sun, a darling of the dot-com era, has been struggling since the tech bust of 2001 to find its place. The company has cut thousands of jobs and tried to refocus on open-source software besides the proprietary systems it built much of its wealth on.

IBM, after an enormous restructuring in the 1990s, has proven one of the technology industry’s most reliable earners. It has gobbled up dozens of companies in recent years. But a $6.5 billion deal would be its biggest to date. It also would represent a big premium for Sun, which closed trading Tuesday with a market capitalization of less than $4 billion.

Archived comments

If IBM buys Sun, you can kiss about 2000 of the 2200 local Sun employees goodbye.IBM has 8000 people in China and India lined up to replace them already.

So basically, the 7000 jobs at STK and 4000 at Sun that existed in 1999, will be down to about 200.

moabite

3/18/2009 9:15:17 AM

Good move for both companies, particularly Sun and their share holders.

Viper1963

3/18/2009 9:18:58 AM

“particularly Sun and their share holders.”

Their share holders for sure, for Sun employees?I don’t think so.Having said that, IBM has figured out how to create a successful business model with open source.Sun has never been able to do so, although they have made some of the greatest contributions to it.That seems to be the most compelling reason IBM would even be interested.Regardless, Sun probably couldn’t survive another 10 years on their own.

darth

3/18/2009 9:45:30 AM

ouch, I hope Conoco Philipps needs more space………..

thecondoguy1

3/18/2009 9:56:22 AM

IBM+SUN =

BUMSIN

NUBISM

MUNBIS

MUNIBS

SBINUM

RoundisaShape

3/18/2009 10:46:56 AM

Finally, Sun gets put out of its money-losing misery.I do, however, feel sorry for the Sun employees– almost.I mean, how many layoffs can a company go through, and how long can a company continue to lose massive amounts of money, and market share, every year without folding?Is anyone suprised?

Why is IBM over-paying so much for this irrelevant dinosaur?

burmck88

3/18/2009 10:47:01 AM

This is bad news for the local Sun people.So many people used both to leverage their work.So many have worked at both.Any other details?

super_boulder

3/18/2009 10:50:03 AM

$6.5 billion is a decent price to gain control over Java, Solaris, Thumper and the Sparc CPU.Sun has a huge patent portfolio and IBM will be a good steward of that IP based on historical precedent.

biteme@bugmenot.com

3/18/2009 11:02:05 AM

It was only a matter of time, and Goliath just crushed David like a grape.Hope the folks at Sun aren’t asked to take a paycut and relocate to India like many IBM’ers before them were.It’s a redundant business to IBM, which means a lot of trimming will be done.It’s also one less competitor for IBM now, the dark side of the force is gaining strength…

edwizer26@yahoo.com

3/18/2009 11:02:53 AM

We are the Borg.

You will be assimilated.

Resistance is futile…

gsegiet@flash.net

3/18/2009 12:36:08 PM

Sun is NOT a dinosaur, they have simply been extremely mis-managed ( which is seems like the rule of the day in these times ), since McNealy stepped aside from the day to day.

Overpaid for STK ( still trying to figure that one out ), lost focus from what they do best:servers/software, and Jonathan Schwartz, well, some of the inner circle folks are saying he is acting more and more like Howard Hughes each passing day ( reclusive/insane ).

What they have going for them?Java, Solaris 10, My SQL, and some really kick *ss server products.Many folks do not realize this, but IBM announced support for Solaris 10 on their X86 platforms well over two years ago,their own Unix operating system (AIX) won’t run on those systems ( very efficiently ).I could go on and on, but this is a good deal for both companies, and by combining, would make even a better adversary to Dell and HP.

Viper1963

3/18/2009 2:57:53 PM

Geez — just three weeks ago I sold all my Sun stock. So low that it looked like it had stopped circling the drain and had gone down the tubes. Silly me.

RamalamaDingdong

3/19/2009 2:55:13 AM

Viper 1963:You obviously know the tech stuff much better than I do, however, I must say…..You think Scott McNealy did a great job at running Sun?Wasn’t the fact that the company was doing horrible (like 10 years ago) under McNealy the very same reason he was fired?

Sun has also been mismanaged by their public relations department, or lack of one.The only thing I’ve ever read about them for 10 years is yet another restructuring, layoff or another massive quarterly loss in their financials.I’ll be glad they finally leave the headlines because it is such a downer.What other tech company can say that?Answer:not many.

burmck88

3/19/2009 10:33:01 PM

I wonder if this will make IBM “too big to fail.”

1860

3/20/2009 8:59:01 PM