IBM's bid to acquire Sun might cost jobs

Source: denverpost.com
A reported negotiation to purchase Sun Microsystems could mean layoffs for two of the region's largest employers.

Boulder's largest private-sector employer, IBM Corp., reportedly is in talks to purchase Sun Microsystems Inc., Broomfield's biggest, in a move that has analysts pondering corporate culture clashes and possible job losses.

Several published reports Wednesday citing unnamed sources said IBM is offering at least $6.5 billion in cash to acquire longtime rival Sun.

Neither company commented on the reports.

Analysts said a combination of Armonk, N.Y.- based IBM and Santa Clara, Calif.-based Sun likely would produce job cuts.

IBM employs about 3,400 at its campus in north Boulder. Sun Microsystems has an estimated 2,500 workers at its facility in Broomfield's Interlocken business park.

"It's certainly always a concern when you have a merger or an acquisition and there is duplication in job functions," said Don Dunshee, president and chief executive of the Broomfield Economic Development Corp. "We'd hate to see any adjustments to their employment numbers."

IBM would benefit from acquiring Sun's large share in the computer-server market and gaining access to Sun's customer base in finance, telecommunications and government, analysts said.

But the deal would create strange bedfellows, said University of Colorado economist Gary Horvath.

"You've got a West Coast company and an East Coast company with distinctly different corporate cultures," he said.

Former Sun chief executive Scott McNealy "has been quite an IBM basher over the years," said technology analyst Frank Gillett of Forrester Research in Cambridge, Mass. "It would be very curious to see them combine."

Gillett said Sun is known for having "a lot of cool technology but not much recognition in the market for it."

Reports of IBM's possible purchase sent Sun shares soaring $3.92 Wednesday to $8.89, a gain of 79 percent. IBM was down 96 cents, or 1 percent, to $91.95.

Until Wednesday, Sun's stock had fallen about 70 percent over the past year as restructuring efforts and thousands of layoffs failed to prevent two straight quarterly losses with prospects for a third, according to analysts' estimates.

Sun said in November that it would cut up to 6,000 jobs, 18 percent of its global workforce, after terminating 7,000 positions in the previous three years. Sun does not disclose regional employment totals, but economists have estimated that its Colorado workforce has dropped from about 3,500 in 2007 to 2,500 now.