Sun's Options Without IBM: Split Up?

Yesterday the world woke up to news that what seemed like an almost signed and sealed deal between Sun Microsystems had fallen through. Questions immediately turned to what struggling Sun was going to do next.

Following a legal review on Saturday, IBM reduced its offer from $9.55 per share to $9.40. The offer was then presented to Sun’s board, and the board recoiled. While the offer was not rejected the right off the bat, the NYT reports that Sun wanted wanted certain guarantees that IBM considered “onerous.” Sun then said it would no longer abide by its exclusive negotiating agreement with IBM and on Sunday, IBM withdrew its offer completely.

CNN today reports that Sun does have a plan B, huge sighs of relief right? Well, not quite. Sun analysts are singing the praises of software side of Sun. However, while the software is hot, the analysts say Sun as a whole is not as attractive,

"The company is too complex -- there are parts that others just don't want to take on," George Weiss, a Sun analyst at Gartner told CNN Money. "Sun will have to take alternatives by either splitting up or downsizing. Sun still has several options, since there are parts of the company that could bring value to one or several companies on the market," he continued.

"But those companies probably won't want to acquire Sun as an entire entity," Weiss finished.

The idea of a Sun spinning off its departments and selling some but not others is daunting. Without knowing who’s in the market to buy the company now that IBM is out of the business, it’s impossible to know which way it would go. Still, food for thought.