IBM Is Just Not That into a Deal with Sun

Sun Microsystems (NASDAQ:JAVA) reseller channel partners briefly enjoyed a few moments of hope on news yesterday that Sun had asked former suitor IBM (NYSE:IBM) back to the bargaining table to talk about a potential acquisition. Breaking News: Oracle to buy Sun Microsystems But yesterday CNBC reported that IBM told Sun it was uninterested in resuming […]

Written By: Jessica Davis
Apr 17, 2009
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Sun Microsystems (NASDAQ:JAVA) reseller channel partners briefly enjoyed a
few moments of hope on news yesterday that Sun had asked former
suitor IBM
(NYSE:IBM) back to the bargaining table to talk about a
potential acquisition.

Breaking News: Oracle to buy Sun Microsystems

But yesterday CNBC reported that
IBM told Sun it was uninterested
in resuming deal talks and was not
interested in buying Sun at any price. And while other suitors have been named
as potential white knights for Sun—Cisco (NASDAQ:CSCO), HP (NYSE:HP), Intel
(NASDAQ:INTC) and even Dell (NASDAQ:DELL)—the CNBC report said that none of
these was coming to Sun’s rescue.

Bloomberg news also reported that Cisco
CEO John Chambers said
yesterday that if Cisco had been interested in
buying Sun, Cisco would have done it already.

A glimmer of hope remained yesterday, however, as Sun’s stock price still held
fast, between $6.25 and $6.50, even as trading resumed today, rather than
falling to pre-deal levels in the $4 range. That shows that investors believe a
deal still may be possible.

The uncertainty more than anything has made business tough on Sun Microsystems’
loyal channel partners since news of the potential IBM deal first leaked out.

Mike Clesceri, a partner and executive vice president at Chicago-area Sun
reseller and solution provider Laurus Technologies, says that Laurus’ customers
are asking about the future of Sun technology and whether it’s safe to buy.

“For this quarter being up in the air is the biggest worry,” says Clesceri.
“There are companies out there that Sun has had to defend its viability to.”

And when the acquisition talks were on, customers were concerned if the core
pieces of technology they purchased from Sun would survive any acquisition,
says Clesceri. Now customers and partners are concerned over speculation in the
market that if Sun doesn’t do a deal, the company is dead.

Clesceri was one of many Sun partners who stood to gain if the IBM/Sun deal
went through. He says such a deal opened up many more potential customers to
him to sell solutions based on Sun’s Solaris Unix operating system and other
products from Sun.

Laurus is considered a Sun-only partner by Sun in Sun’s reseller channel
partner program. As such a partner, Sun can’t sell products from what Sun
considers its major competitors, including IBM, HP, EMC and NetApp. In return
Laurus gets preferential treatment in terms of partner benefits.

Because of the Sun-only partner designation, a company like Laurus would stand
to gain significantly through a merger with IBM.

“Whenever I have more solutions to sell to my customers, it’s only good for
me,” says Clesceri. “The IBM/Sun deal would have just given me more to sell.”

In addition, Clesceri says the potential exists for more platforms to support
Solaris, another benefit his company. Now those bets may be off.

However, in spite of the uncertainty, Clesceri says Laurus continues to grow
and the company ended its first quarter with “significant growth quarter over
quarter."

“The customers who didn’t need to spend money stopped spending money awhile
ago,” Clesceri says. “The people who need to buy, need to buy.”

 

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