Sun Microsystems stocks trading on the Frankfurt exchange in Germany fell nearly 25 percent this morning, a harbinger of the consequences the one-time Silicon Valley high-flier faces as a result of its failed talks to sell to IBM.

Yesterday, reports surfaced that IBM withdrew from talks to acquire Sun in a deal many valued at $7 billion. While neither Sun nor IBM have commented on the talks or the reported impasse, sources say a price dispute broke the deal.

IBM is said to have initially offered Sun $9.55 per share, which was nearly 100 premium over the $4.97 per share Sun’s stock was trading at when the acquisition talks began. As the talks lingered over the last three weeks, Sun’s stock rose to a high of $8.55; it closed Friday trading on Wall Street at $8.49. IBM reportedly lowered its offer to $9.50 per share.

While price apparently is the issue that broke the acquisition negotiations, Sun was reportedly concerned over what would happen if IBM backed out of the deal and so sought concessions and assurances. Sun was reportedly concerned that its stock would face a similar fate to that of Yahoo, which saw its shares’ market value plummet following the failed merger talks with Microsoft last year.

The concerns of IBM backing out were reportedly based on regulatory obstacles that might have stood in the way of the deal. IBM’s acquisition of Sun would elevate its share of the server market to nearly 44 percent, far outpacing rival Hewlett-Packard, which holds 30 percent of the server market. Of potentially greater concern is that the marriage of the two companies would give IBM nearly 65 percent of the high-end Unix market, which some speculated would trigger antitrust oversight.

Beyond the server market, IBM and Sun are dominant players in tape storage technology. Some analysts have speculated that IBM might be compelled to spin off Sun’s tape storage business to satisfy regulators.

Some analysts and industry observers have indicated that the IBM-Sun deal will never happen because it simply doesn’t make sense. Many reports have talked about the server powerhouse that the combined companies would make, but others have cited that there is tremendous overlap in technologies and products, and the only thing IBM would get from the acquisition is market share.

Some analysts have indicated that better suitors for Sun would have been Cisco Systems, which recently entered the server market and has ambitions for storage; Dell, which needs to enhance its server and storage business; and Apple, which some believe needs to find a position in the business technology market.