Updated from 10:42 a.m. EDT

With M&A talk swirling around Sun Microsystems ( JAVA) and IBM ( IBM), investors are already weighing the impact of a possible acquisition.

Talks are already under way between the two firms, according to a report in the Wall Street Journal, which says that IBM could pay up to $6.5 billion for the troubled tech firm.

Sun's stock soared in pre-market trading, rising $3.23, or almost 65%, to $8.20, as investors warmed to the idea of an IBM acquisition. Shares were recently rocketing 79.3% to $8.91.

Analyst firm Goldman Sachs removed Sun from its "Conviction Sell List" Wednesday, and shifted the company's rating to 'neutral' in response to the report.

"Our Conviction Sell call has been predicated on Sun as a stand-alone company and the possibility of an acquisition would negate that thesis for the stock, at least over the near term," wrote Goldman analyst David Bailey in a note.

Faced with stiff competition from IBM and Hewlett-Packard ( HPQ), as well as a brutal spending climate, Sun has had to contend with falling sales and a plummeting share price. Sun, which struggled to swallow its $4.1 billion acquisition of StorageTek in 2005, has been hit by slowing demand for its tape systems and Unix servers.

Set against this backdrop, the company's shares have plunged in the last 12 months and are trading well below their 52-week high of $16.72.

Sun has made repeated attempts to breathe life into its business, including layoffs, executive changes, and massive internal restructuring, but it has still been seen as potential M&A fodder.

"Sun's outsized exposure to U.S. financial services, manufacturing and telecom customers should continue to weigh on revenue during the downturn," wrote Bailey, adding that it could be difficult for the firm to achieve sustainable profitability.

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