While greeted with much fanfare when announced in April, Oracle's (NASDAQ:ORCL) planned acquisition of Sun Microsystems (NASDAQ:JAVA) has seemed to lose much of its shine recently.

Indeed, observers, including analyst Rob Enderle, point out that one of the original suitors, IBM, may have become the real beneficiary of the proposed Oracle-Sun deal, as customers waiting in limbo for some sign that their Sun-based infrastructure would be safe have become easy prey for IBM's sales organization.

That was evident in Sun's most recent quarterly results when the embattled company announced a year-over-year revenue decline of 31 percent, which Sun blames on both the economic downturn and the "uncertainty associated with our proposed acquisition by Oracle, increased competition and delays in customer purchasing decisions," the company says in its 10K filing.

Resource Library:

And it led Enderle to write recently: "I think Snorkle [Sun/Oracle] is in deep trouble, but I'm not yet convinced that Oracle will walk away. But the trend is anything but good."

Among the bad news: a hold put on the deal by regulators in the European Union who are concerned that the deal may be anticompetitive because Oracle's databases and Sun's MySQL are considered direct competitors in some markets.

Toni Sacconaghi of Bernstein Research says he believes that the EU will ultimately approve the deal, but perhaps with a condition involving MySQL. Meanwhile, the delay continues to hurt Sun's business with each passing day.

And because of the falloff in business Sun has experienced due to the uncertainty around Sun technologies, Sacconaghi says the deal won't be nearly as accretive to Oracle's revenues as Oracle has been saying.

Sacconaghi says Sun's results and run rate call into question Oracle's ability to deliver on the promised $1.5 billion first-year operating profit accretion from the Sun acquisition. He says Bernstein now expects Sun's non-GAAP (Generally Accepted Accounting Principles) earnings to be nearly $900 million less than his company modeled when the deal was announced in April.

"Assuming no material revenue synergies, our analysis suggests that in order to hit its $1.5 billion accretion target, Oracle may need to reduce Sun's work force by 15,000, which represents over 50 percent of Sun's current headcount and appears implausible," Sacconaghi writes in a brief report.

Oracle executives did not adjust any expectations for the Sun acquisition during a conference call with financial analysts Sept. 16 following Oracle's earnings announcement, but did say the company has been working together with Sun on joint product integration and development, which is what is allowed before the acquisition actually goes into effect.

Yesterday, Oracle announced total sales of $5.06 billion for its most recent quarter, lower than analysts had expected, and also lower than the $5.33 billion the company reported for the same period a year ago. Oracle reported net income of $1.22 billion, compared with $1.09 billion for the same period a year ago.