Report: IBM in talks to buy Sun Microsystems

Report: IBM in talks to buy Sun Microsystems San Francisco  - Technology giant IBM is in talks to buy rival Sun Microsystems for 6.5 billion dollars, the Wall Street Journal reported Wednesday. The deal would represent the largest purchase ever by IBM and signal the company's determination to maintain a strong presence in the market for servers in the face of challenges from HP, Dell and Cisco.

News of the negotiations sent the long-languishing shares of Sun up by some 66 per cent to 8.27 dollars in early trading Wednesday. If the deal is finalized, it would represent a premium of 100 per cent on Sun's closing price of 4.97 dollars on Wednesday.

However the deal could face anti-trust scrutiny from the Obama administration. The combination of the two companies would create a new technology giant with 40 per cent of the market for servers, and over 62 per cent of the market for servers running the UNIX operating system.

A combination of IBM and Sun would also represent one of the largest technology research organizations in the world. The two companies' combined research budget currently totals about 9 billion dollars per year.

Sun has been struggling ever since the dot com crash of 2001, and last November, stunned by a 2-billion-dollar quarterly loss, it announced that it was cutting as many as 6,000 of its 33,000 workers over the next year. (dpa)

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