IBM making a bid for Sun Microsystems

Hello all,

A very brief posting this morning. IBM is bidding to buy Sun Microsystems. As I said in a blog posting earlier this month, businesses are starting to behave to the financial market conditions in a rational manner. They are deploying their cash and cash equivalents to buy rival companies whose shares of stock are on sale due to the collapse of the stock markets. Think about what it takes in order to spend billions of dollars in the midst of economic conditions that are poor and where the environment is described by many as “the worst since the Great Depression.” A bidder for a rival would have to have a lot of confidence in their choice, don’t you think? They also would also have to have confidence that the sky is not really falling and that health will eventually return to the economy, right? Exactly. That’s why these continued merger announcements are valuable and interesting and a sign of an eventual return to economic health. Lastly, businesses typically have pretty good insight into the worth of their rivals and would likely prefer to buy a rival as cheaply as possible. So a bid at current stock market levels is a pretty good indication that the bidder feels as if prices have bottomed.

‘Nuff said,

Jason