IBM + JAVA = Not Happening

Sun Micro (JAVA) is a public company.

If you were a shareholder on March 9 (admittedly a market low) with the stock trading at $3.84, and I told you that you could sell your stock at $9.40 per share, you would have rightly jumped for joy.

IBM was kind enough to make such an offer. Unfortunately, according to Bloomberg, founder Scott McNealy and the rest of the JAVA board elected to reject the final iteration of the deal as too cheap. What a joke. I don't know the exact details and don't need to. Boards work for the shareholders (not in this case). JAVA's stock is going to get crushed today and the current JAVA CEO will probably get the boot.

Interesting times ahead. I don't expect IBM to handle this one as poorly as MSFT handled YHOO. I still expect this deal to get done.

Don't sell IBM

But some other folks are going to.

<---Six month chart of IBM and Hewlett Packard, both of which are relatively defensive technology stocks - places that investors hide if they want some tech exposure in case things go up.

Things haven't gone up. Seriously not up, and IBM has dramatically outperformed HP over the past month. While I am not 100% sure why people have sold HP before IBM, it probably relates to the fact that HP had been a margin turnaround story, and turnarounds are tougher sledding in a negative growth environment.

If we don't get an up market in the coming weeks, expect IBM to play some catch up on the downside.