Valley Buzz: Sun Blows the IBM Deal

For once, the biggest story in the Valley isn’t about sexy Web upstarts. It’s about big-old-boring IBM and seen-better-days Sun. It turns out they aren’t merging after all. In a deja-vu turn of events for anyone who watched the Microsoft-Yahoo drama last year, it seems Sun’s board was split about the deal. You know, the only one the company could allegedly scare up during the period it was shopping itself.

There’s speculation that Scott McNealy, the firebrand founder of Sun who opposed the deal, may be retaking the CEO slot as a result. Having watched Jerry Yang, Michael Dell and other returning founders flounder, I can’t imagine that mollifies upset Sun shareholders. eWeek put things well when it wrote that Sun better have “a solid backup plan.”

The most successful Internet companies are frequently the ones who destroy traditional business models and sky-high fees charged by middlemen. Consider the music industry with iTunes and file sharing; media with blogs and enterprise software with open source and software-as-a-service. Revolution Money, founded and funded by former AOL scions Ted Leonsis and Steve Case, has been trying to do the same to the world of credit card payments and processing, but it’s had mixed results. Today, the company announced another $42 million in funding to keep on trying.

The money came from a Goldman Sachs affiliate, Citigroup, Morgan Stanley and some individuals from the financial world, former Charles Schwab CEO David Pottruck and former JP Morgan Vice Chairman David Golden. (It seems not everyone in the financial world is cash-strapped and in need of a bailout.) The company said it planned to be in three million stores by 2011, and wouldn’t be filing to go public or selling itself until it hit that milestone. I always like a startup swinging for the fences, but it’s an interesting declaration at a time when almost no one is going public or selling.

Also on the funding front, Glam Media, an ad network aimed at women, has added $10 million to its coffers, totaling a whopping $124.2 million to date. The deal was part of a push to expand into Japan and Germany, as the company continues to respond to the downturn by investing to become bigger. The details are at PaidContent.

Bloggers are also a buzz today about hints that Time Warner may be readying itself for an AOL spin-out….finally. Kara Swisher called it when former Google ad exec Tim Armstrong joined the company last month. Today, Reuters reports that the company is asking bondholders to change some terms of their credit deals to pave the way for a deal. It should be welcome news for TimeWarner investors who’ve long seen the AOL drag down the company’s growth.

If all that seems like too much good news for a recession, you’re right. Today, Challenger, Gray & Christmas reported that high-tech companies laid-off nearly 85,000 people the first three months of this year—the most since 2002. And they see no reason that quarterly total won’t keep rising. If you’re in tech and still employed, I suggest you get back to work while you still can!