Feeds

IBM sics lawyers on Bigger Indigo deal

Sun scrutinized

High performance access to file storage

IBM has deployed its lawyers to scrutinize a possible acquisition of Sun Microsystems.

The Wall Street Journal has become the unofficial conduit through which details about the acquisition talks - however sketchy - are coming to light. On Friday afternoon, the Journal reported that IBM's lawyers were hard at work looking at all of Sun's contracts and agreements as part of a due diligence extravaganza.

The paper cited "people familiar with takeover negotiations" as a source for the information that the lawyers were involved, the same source for the initial story last Wednesday morning that said IBM was interested in acquiring Sun for something around $8bn. That offer appears to include Sun's cash and equivalents, which stood $1.63bn as the fiscal 2009 second quarter ended in December 2008, its short-term marketable debt securities, which stood at just a smidgen over $1bn, and its long-term securities, worth $364m, as washed against the company's long term debt, at $569m, its accrued liabilities, at $1.2bn, possibly other debts and obligations.

While IBM's lawyers are looking over Sun's licensing contracts for various technologies (both stuff that Sun licenses to others, like Java, and stuff that Sun has licensed, like rights to Unix), you can bet the IBM and Sun bean counters are arguing over what liabilities IBM will assume as part of the takeover. Sun's deferred revenues and accounts receivable plus the cash on hand make it worth more than its stock was trading at before the IBM deal rumors started on Wednesday. How much more we will learn when and if the lawyers working on behalf of IBM and Sun ever come to terms. For all we know, talks have broken down.

No one at IBM or Sun has confirmed to El Reg that talks are even going on, much less have they said anything about specifics. But this kind of story would have been denied, however subtly, to the IT trade press had there not been something to it. I don't see Scott McNealy laughing anywhere.

The scuttlebutt is that a deal could be announced as early as this morning, and as one IBMer (who said emphatically and repeatedly that he didn't know anything about what was going on) so succinctly put it: "We had all better get used to the idea that this could happen, and soon."

Personally, I don't think I can get used to the idea of IBM acquiring Sun. That doesn't mean it won't happen, of course. But I just get the feeling that this is like the Sequent deal from a decade ago, writ larger. IBM paid $810m to buy Sequent, an up-and-coming provider of NUMA-style servers with a Unix background that was getting ready, finally, to launch a serious Windows product. And aside from the Linux labs in Beaverton, Oregon and some use of Sequent NUMA technology to expand the Power and x64 lineup at Big Blue, Sequent was just never heard from again. IBM bought it to rip the guts out of it and use the valuable bits, but mostly to keep it from becoming a threat. It was a smart move, no doubt. But that doesn't make it the right thing for the industry.

This Sun deal, should it come to pass, could be good. We could see the two companies, with their very different engineering cultures, spawn a new age of innovative IT. A lot depends on the future IBM is trying to create and how it sees Sun fitting into that future. If IBM is trying to create a future with no Sun technology in it, there are cheaper ways of doing that than paying $8bn, more or less, in cash. So that is probably not it. It is hard to imagine Sun being such a big threat that IBM would pay so much money just to take it out. But who knows?

Perhaps we will in a day or two. ®

High performance access to file storage

More from The Register

next story
This time it's 'Personal': new Office 365 sub covers just two devices
Redmond also brings Office into Google's back yard
European Court of Justice rips up Data Retention Directive
Rules 'interfering' measure to be 'invalid'
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Cisco reps flog Whiptail's Invicta arrays against EMC and Pure
Storage reseller report reveals who's selling what
Bored with trading oil and gold? Why not flog some CLOUD servers?
Chicago Mercantile Exchange plans cloud spot exchange
Just what could be inside Dropbox's new 'Home For Life'?
Biz apps, messaging, photos, email, more storage – sorry, did you think there would be cake?
IT bods: How long does it take YOU to train up on new tech?
I'll leave my arrays to do the hard work, if you don't mind
prev story

Whitepapers

Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
HP ArcSight ESM solution helps Finansbank
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.