IBM has withdrawn its $7 billion bid for Sun Microsystems, that's what the NY Times is reporting.  Based on unnamed sources, the newspaper is confirming that talks between IBM and Sun have collapsed.  The New York Times points out that this now leaves Sun free to pursue other opportunities for selling itself.  The question is, what are those opportunities?  And are they now "damaged goods" as the article mentions. 

Since last year, Sun executives had been meeting with potential buyers. I.B.M. stepped up, seeing an opportunity to add to its large software business, acquire valuable researchers and consolidate the market for data center hardware.

In their talks, I.B.M. and Sun had a contract to deal with each other exclusively. Now Sun is free to pursue other suitors, including I.B.M. rivals like H.P. and Cisco Systems. Cisco recently entered the market for server computers.

The breakup of the deal, analysts say, is a blow to Sun’s prospects. “For I.B.M., given its size, this was never a transformational deal,” said A. M. Sacconaghi, an analyst for the investment research firm Sanford C. Bernstein. “But in Sun’s case, it’s an extremely material event.”

“This leaves Sun in a tough situation,” Mr. Sacconaghi added. “Sun was on a path to selling itself, and this will inevitably raise questions in customers’ minds, no matter what Sun says, about its commitment to a go-it-alone strategy.”

Read the entire NY Times article, here.