IBM's Sun StrokeIBM ( IBM) should know by now it's dangerous to look directly into the Sun ( JAVA). Merger talks are already under way between IBM and Sun Microsystems, according to a report in Wednesday's Wall Street Journal, which says that IBM could pay up to $6.5 billion for the troubled tech firm. Sun's stock soared more than 79% on the news, finishing the day at $8.89, as investors warmed to the idea of an IBM acquisition. The takeover talk comes at a crucial time for Sun, as the computer systems maker continues to suffer from a brutal spending climate, as well as stiff competition from both IBM and Hewlett-Packard ( HPQ). 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. Last year, the company swung to a massive $1.8 billion loss on $3.7 billion in sales. Set against this backdrop, the company's shares have plunged in the last 12 months and were trading well below their 52-week high of $16.72 prior to Wednesday's spike. Sun traded to a reverse-split-adjusted high of $250 in April 2000, the height of the Internet bubble. It's gone from dot-com darling to tech doormat and now back again. What a long, arduous trip it's been for Sun. And considering all the losses, layoffs, internal restructurings and even a ticker change, one would have thought the sun would have set on this tech wreck a long time ago. Not Big Blue it seems. IBM is willing to pay twice Sun's market value, despite the company's not-so-sunny track record. If the deal goes through, Sun's losses will dilute IBM's earnings by about 5 cents a share, according to one buy-side analyst. This leads us to the conclusion that IBM is doing the deal more out of desperation, and an inability to grow its business organically, than valuation. "I'm not worried about the future, I'm focused on its arrival date," wrote Sun CEO Jonathan Schwartz in a recent blog posting about the relevance of Sun's offerings. It looks like the future is now for Sun. And they better take advantage of it before IBM realizes it had a total eclipse of the brain and drops the offer. Dumb-o-meter score: 80 -- IBM needs to wake up and smell the JAVA.
Leaving Las Vegas SandsLas Vegas Sands ( LVS) is suffering from a case of March madness. Too bad it's in the boardroom, not the sports-betting business. The struggling casino company said board member James Purcell resigned last Friday due to a disagreement over the ouster of William Weidner, Sands former president and chief operating officer. Weidner, a nearly 14-year veteran of the company, resigned the previous Sunday after the board informed him his employment would be terminated. In a letter filed with the Securities and Exchange Commission, Purcell said he had doubts "as to the wisdom and the timing" of the board's decision to cast out Weidner. "No business enterprise should undertake the significant actions that have been and are proposed to be taken today without a full meeting of its board," said Purcell. Sands, which is controlled by Chairman and CEO Sheldon Adelson, replied in a statement that "the process was proper and appropriate under the circumstances." The company has already replaced Purcell with Jeffrey H. Schwartz, chairman and co-founder of Global Logistic Properties. What a joke. In a town where the house always wins, these guys sure are acting like a bunch of craps shooters. And all this imbecilic, C-level sniping could not come at a worse time. Sands is struggling to avoid a default on its $10.47 billion outstanding debt in the face of vanishing gamblers and untimely expansions into Singapore and Bethlehem, Pa. Sands stock now trades just at a lowly $2, down 97% over the past year. To be sure, this house has been divided for a long time, so all this pettiness probably should have been expected. In a regulatory filing last year, the company set a new standard for corporate dysfunction when its board created an executive committee just to settle fights between Adelson and other senior management members. Although it's not like Adelson was ever going to lose a boardroom battle anyway. When he was asked last week if Weidner's termination would lead to other managers departing, the imperial Adelson replied that "nobody's indispensable." That is, nobody except the Sands' customers: the gambler and his money. And like Elvis Presley, the patron saint of Sin City, he has already left the building. Dumb-o-meter score: 95 -- The Sands of time are running out for Sheldon Adelson's casino empire.