In the middle of last month the Wall Street Journal reported that IBM was in negotiations to buy Sun Microsystems according to its sources, but neither company verified the rumour.
Yesterday the WSJ's great rival, The New York Times, cited three of its own sources in reporting that IBM has now pulled out of negotiations with Sun, having failed to come to an agreement over price.
It looks like IBM uncovered some potential complications in a purchase of Sun while conducting its due diligence and lowered the price it was prepared to pay for Sun from $9.55 per share to $9.40. One thing led to another and eventually IBM decided to withdraw its offer, according to the NYT.
It's not clear whether IBM is just playing hard-ball or if it has genuinely walked away, but all the investors who bought Sun shares at around $8, after they jumped from $5 following the WSJ story, will be feeling pretty exposed right now. Sun's shares are currently down 25 percent in pre-market trading.