After trending higher for much of the past month, computer hardware stocks have come under considerable selling pressure in morning trading on Monday. The pullback is largely due to the reported collapse of merger talks between IBM (IBM) and Sun Microsystems (JAVA).
The losses by hardware stocks are contributing to a 6.2 percent loss by the Amex Computer Hardware Index, which is pulling back well off the six-month closing high it set on Friday. Nonetheless, the index remains up more than 40 percent year-to-date.
Sun Microsystems is helping to lead the way lower, with the server and software maker currently down 23.3 percent. Meanwhile, IBM is currently down 1.3 percent after ending Friday's trading at a six-month closing high.
The steep decline by shares of Sun come after media reports said that acquisition talks between IBM and Sun have collapsed, putting the deal at risk of failure.
The reports said that Sun's board rejected a formal acquisition offer by IBM on Saturday, sending a notice terminating Sun's deal to hold talks exclusively with IBM. In response, IBM reportedly withdrew its offer to acquire Sun on Sunday.
Last week, the Wall Street Journal had said that IBM was close to finalizing a deal to acquire Sun for $9.55 per share in cash. The offer was said to be about a dollar per share shy of Sun's earlier expectations.
The Journal noted that Sun agreed to lower its takeover price to between $9 and $10 per share from $10 to $11 on the condition that IBM commits to acquiring it regardless of a government antitrust review.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.