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With Sun Microsystems (NASDAQ:JAVA) and IBM
(NYSE:IBM) reportedly breaking off
acquisition talks, what’s next for Sun? Are there other suitors waiting in the

Not according to Bernstein Research’s senior analyst Toni
Sacconaghi, who says there are no other likely suitors to step in if IBM
completely walks away from the deal.

“[Sun] approached most logical buyers several months ago,
with IBM being the most interested,” says
Sacconaghi, in a brief report issued following the news that talks between Sun
and IBM had broken down.  

“While we believe that HP makes the most sense given its
cost focus, physical proximity to [Sun] (leading to more facile facilities
consolidation), and more complementary product lines (HP is not as strong as IBM
in Unix), the company appears fully focused on its acquisition of EDC, and a
coincident deal to acquire Sun may prove to be overly distracting.

“[Sun’s] higher end server product portfolio would be very
complementary to Dell, but we believe that an acquisition would be too pricey
and represent too hearty an integration challenge for Dell.” 

And what about Cisco, which has recently signaled its interest in the server market with the release of its own servers as part of its Unified Computing initiative? 

"I would be very surprised, but not shocked," Jeff Evenson, senior analyst for data networking at Bernstein Research tells Channel Insider. "I would definitely put the odds significantly below 10 percent."

Evenson says that if Cisco had wanted to use Sun to get into the server space, or access to Sun’s sales channel, it could have pursued that deal several years ago.

Bernstein Research acknowledges that press reports say the
breakdown in talks may be due to “brinkmanship” as Sun and IBM
look to solidify their own positions in negotiations. However, if that’s the
case, such a move may backfire for Sun.

“We do think that a collapse in the talks has considerably
weakened Sun’s hand,” Sacconaghi says.

News reports of IBM
acquiring Sun first surfaced on March 18. Sun shares were trading at $4.97 the
day before word of the negotiations were first reported.  News reports placed the original offer price
at $9.55 per share, but that over this past weekend IBM
had lowered that offer to $9.50 per share. Both offers represent a premium over
Sun’s share price, which had risen to $8.49 on Friday, April 3.