IBM in talks to buy Sun

A Wall Street Journal report says that International Business Machines Corp. is in talks to buy Sun Microsystems, in order to "bolster IBM's heft on the Internet, in data storage and in government and telecommunications areas."

The acquisition would probably be IBM's largest ever, uniting two companies that don't rely on the dominant Windows operating system or Intel processor chips. Both IBM and Sun actively support open-source software, too, in the form of Linux operating systems and Java Web software.

Struck by both the slumping economy and heavy competition for enterprise IT back office systems, Sun's stock has taken a nose dive on the Nasdaq in the past two years, dropping from $25.92 per share in February 2007 to as low as $3.17 last November. Sun's current market capitalization is $3.7 billion.

IBM's offer, the Journal reports, will be at least $6.5 billion in cash, nearly double Tuesday's closing price of $4.97 a share.

Valley rumormongers have said for months that Sun's management was looking for a buyer. The Journal's take is that "any transaction would strengthen IBM's position against Hewlett-Packard Co., the largest company in the information technology industry."