Bladewatch.com

Reuters

NEW YORK (Reuters) – As IBM’s (IBM.N) negotiations to buy Sun Microsystems Inc (JAVA.O) enter another week, some analysts are weighing the risks in what could be the biggest U.S. technology deal this year.

As of Friday, IBM was still examining Sun’s business as part of its due diligence process, and talks may extend beyond next week, according to one source who was not authorized to speak about the talks and therefore requested anonymity.

Most on Wall Street say a deal would bolster IBM’s high-end computer and software business, and help ensure the survival of much-smaller Sun. But they also note that Sun’s lagging business could hurt IBM’s margins and derail its shift to more lucrative software and services from increasingly commoditized hardware sales.

“Strategically we’re a little lukewarm on it,” said Edward Jones analyst Andy Miedler. “Financially this could make sense. But we question how much IBM needs Sun and whether it will would be able to get better value out of Sun’s software than Sun is getting.”

Wachovia analyst David Wong disagreed with some views that Sun’s software assets would help IBM grow.

It will be interesting to see how this develops, in many cases it might open more doors to IBM which might previously have been closed, and at the same time offer IBM new opportunities for revenue around Sun’s open source offerings and Solaris platforms. Interestingly, where would this leave the Sun x86 server business, their blade server offerings?

We’ll have to see, regardless I offer them both the very best for the future.

No related posts.

Related posts brought to you by Yet Another Related Posts Plugin.