Technology Rumor Confirmed: IBM, Sun

So, price does seem to matter to IBM (IBM Quote).

Confirming speculation reported here on March 20, The Wall Street Journal, citing people familiar, says that price has been a major stumbling block on the road to a merger between IBM and Sun Micro (JAVA Quote).

The price of the still unconfirmed deal has dropped to between $9 to $10 a share, according to a the latest Journal story.

When first reported, the terms called for IBM to pay $10 to $11 a share or a total of $6.5 billion for Sun. The eye-popping price represented a 100% premium over Sun's recent share price, and it sparked question as to whether IBM was overpaying for the slumping server shop.

Sun swung to a massive $1.8 billion loss last year on an 11% drop in sales. Some analysts have estimated that Sun's losses will dilute IBM's earnings by 5 cents a share if the deal goes through.

On Tuesday, the Journal updated the original story, saying that "the first report came relatively early in the process, when IBM and Sun hadn't had a chance to hammer out any differences into a merger agreement."

To investors watching the action, the latest news confirms suspicions that one side -- presumably Sun -- leaked the story to help prod IBM and possibly scare up a bidding war by other interested parties.

In recent days, the share prices of the two companies have been heading in opposite directions. Sun is down 8% since the stock peaked after the deal was reported on March 18. And IBM is up 4% this week as investors get the sense that it may not be interested in the $10 a share price tag.