IBM in talks to buy Sun Microsystems

March 18, 2009 6:27:12 PM PDT
One of Silicon Valley's storied computer companies may be in talks to sell to IBM. Sun Microsystems' stock soared on word of the possible deal.

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But if it happens, it could trigger massive layoffs.

The name Sun Microsystems could fade away if the $6.5 billion deal goes through with IBM. It would also cast major doubts about the fate of 33,500 employees around the world.

"The bad news is there will be cuts. The good news is those cuts are probably coming regardless because Sun was in trouble. The folks that are left, though, will be much more secure. One of the big problems has been, even if you were left at Sun, you were never sure if your job was secure," said technology analyst Rob Enderle.

Enderle thinks half of sun's employees could lose their jobs.

Glassdoor.com, A Sausalito-based website that tracks salaries and employee comments about their companies, says sun workers worry more about layoffs than any of the 21,000 firms in its database.

"Sun's 22 percent mention of the word layoff in their reviews is the highest of any company on the Glassdoor site. So the average for all companies is only three percent," said glassdoor.com CEO Robert Hohman.

The number is nine percent for IBM employees.

Sun is dwarfed by IBM in the fast-growing server business. Servers are centralized computers that store data and software for multiple companies at remote sites.

Rick Merritt covers both companies for the trade publication EE Times.

"IBM would likely borrow some of the ideas but they would end up a few years later in IBM's own processors, and the good work that Sun has done will probably be just eventually transitioned away," said Merritt.

Analysts worry about a clash of cultures. Sun and IBM have different personalities.

"Sun has long been the maverick of the computer industry, and of course, IBM is Big Blue, the conservative part of the computer industry," said Merritt. "So this is really an oil and water combination. It's tough times, so they can make it happen, but it wouldn't feel easy for the people inside."

Neither IBM or Sun would talk to ABC7 about any possible negotiations.

"If the offer is accepted, $6.2 billion would be considered a bargain. That's how much Sun makes in six months.

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