IBM To Buy Sun Microsystems?

In a story that is just breaking this morning, the Wall Street Journal reports that IBM is in early stage talks to buy Sun Microsystems "in a combination that would bolster IBM's heft on the Internet, in software and in finance and telecommunications markets." The WSJ's sources caution that the talks could yet fall through, but, these same sources add, there is also a chance the negotiations could be wrapped up as early as this week. "IBM is likely to pay at least $6.5 billion in cash to acquire Sun," the newspaper adds, "a premium of more than 100% over Sun's closing price Tuesday."

WSJ's Digits blog writes that Big Blue's interest in Sun comes down to control of a $100 billion market, "the data center—the large computer rooms that keep businesses and the Internet running."

And now back to the other big story of the day, the ongoing AIG bonuses drama. AIG CEO Edward Liddy, who pays himself a salary of $1 a year, is in for one tough Wednesday morning. Liddy will be on Capitol Hill today to testify before Congress about the $165 million in bonuses he approved and the company started mailing out last week. New details on the payments emerged yesterday, thanks to a letter New York Attorney General Andrew Cuomo sent to Rep. Barney Frank, chairman of the financial services committee, the New York Times reports. The damning new details include the revelation that AIG "paid the bonuses, including more than $1 million each to 73 people, to almost all of the employees in the financial products unit responsible for creating the exotic derivatives that caused A.I.G.’s near collapse and started the government rescue to avoid a global financial crisis," the newspaper writes.

Liddy is not the only one on the hot seat. Treasury Secretary Timothy Geithner is also feeling the heat for failing to flag the AIG bonus payments earlier. According to the Washington Post, Obama aides were forced to give a public vote of confidence last night to Geithner's handling of the situation. And, in a proactive move, the Treasury said it will "deduct an amount equal to the total bonuses paid from a pledged $30 billion commitment to the troubled insurance company," the newspaper writes.

More criticism is being heaped on AIG's other payments—the more than $90 billion the stricken insurer distributed to its long list of creditors last week, all with federal bailout money. According to the WSJ, "some of the billions of dollars that the U.S. government paid to bail out [AIG] stand to benefit hedge funds that bet on a falling housing market." And, the $12.9 billion AIG paid out to Goldman Sachs is now shrouded in "suspicions of potential conflicts of interest and favoritism," Reuters reports.

Get ready for the next wave of Apple innovation—harnessed by third-party developers no less. Following the success of the iPhone App Store, Apple says it will provide developers with some 1,000 new "building blocks" they can use to make programs for App Store distribution. These new moves "underscore how software has become an increasingly key way for Apple to keep profiting from iPhones, even after consumers have bought the devices ... and how App Store ... keeps consumers tied to using their iPhones," writes the WSJ.  BusinessWeek figures that in opening up its system to developers, Apple "may have just pulled further ahead" of the pack in the smart-phones war. "So far, consumers have downloaded more than 800 million of these apps, which include everything from games like Tetris to software that helps diabetes patients manage insulin levels. The wide range of apps is a major reason the iPhone quickly jumped to No. 3 in the cutthroat smartphone market," the magazine writes.

Coca-Cola finds itself in a squeeze this morning as China's regulators look set to derail a $2.4 billion takeover of China’s leading juice company, the Financial Times reports. The planned deal to buy China Huiyuan Juice, the largest-ever foreign takeover of a Chinese company, is threatened by regulators' insistence that Coca-Cola relinquish the company's brand name after acquisition, the FT says. "The demand is regarded by some as a potential deal breaker because Coke offered to pay a huge premium partly on the basis of Huiyuan’s strong brand image," it writes. The failure to close the deal would be a blow to multinational companies seeking to make acquisitions in China and an indictment of China's newly revamped anti-monopoly regime.

And, finally, Amazon.com is embroiled in a messy patent dispute today over the Kindle with Discovery Communications, the company behind Animal Planet, TLC, and the eponymous Discovery Channel, the FT reports. Discovery's patent-infringement suit claims that "the e-books copyright protection technology used by Amazon had been developed by John Hendricks, its founder, as part of his work in the 1990s on the delivery of digital content."