Sun: Big Trouble in Santa Clara

Sun Microsystems'(JAVA) shares crept up in early trading Wednesday as investors shrugged off talk of boardroom battles and pay disputes linked to IBM's(IBM) troubled acquisition attempt.

The rally reverses a recent slump in the company's share price after IBM reportedly withdrew its offer to buy the struggling tech giant. Sun's stock rose 8 cents, or 1.27%, to $6.36 in early trading Wednesday, outpacing the Nasdaq, which gained 1.02%.

Although price was said to be the major sticking point in negotiations between the two firms, the The New York Times reports that other factors were also at play.

Sun's "change of control" contracts with its executives, senior engineers and managers, for example, were a source of tension with IBM, according to the newspaper. IBM, it said, felt that the payments were higher than it had anticipated, which led to a reduced offer.

The Wall Street Journal also reported a boardroom rift between Sun CEO Jonathan Schwartz and his chairman Scott McNealy. Schwartz is rumored to have favored a sale, whereas Sun co-founder McNealy is said to have opposed the deal.

Despite Sun issuing a statement saying that it stands by its leadership team, there is growing speculation that McNealy may now attempt to usurp Schwartz.

"Butting heads with Scott McNealy at Sun Microsystems is ill advised -- even if you are the CEO," wrote Miko Matsumura, deputy CTO of Software AG, in a blog entry Tuesday.

McNealy, who was Sun CEO until he stepped down for Schwartz in 2006, may now emulate Michael Dell, who returned as Dell(IBM) CEO in 2007, according to Matsumura.