The latest from The Wall Street Journal today is that the IBM/Sun deal may be coming apart. IBM made their formal offer on Saturday and was rejected because the price was too low – $9.40 or below, according to WSJ – and because the offer made it too easy for IBM to walk away at the last minute.

The GCG stance on this is that they will reach a deal, because Sun has to. It’s become common knowledge that Sun was shopped all over the valley, with no takers. The talk about HP and Oracle splitting Sun between them seems to have been just that – talk. It doesn’t sound as if the price and terms were ever compelling enough for Sun to seriously pursue. There’s no white knight left. They either accept an IBM offer or go it alone as a weakened, vulnerable company that has no way of convincing enterprise customers that they’re a stable vendor. This is exactly the sales pitch that their competitors will be making to their installed base, and in these economic times, it’s going to resonate with risk-averse customers. 

So they’ll eventually take a lower price. Perhaps much lower – when investors see this, we expect the stock price to drop like a rock. $9.40 may sound pretty good by the time this is inked. And they’ll take less assurances that IBM won’t walk away when things get tough. Because they have to.