In possibly its last quarter before being taken over by Oracle, Sun has gone nova. But there is one ray of hope.

Struggling Sun Microsystems (NAS: JAVA) has performed even more poorly than analysts expected in its latest quarter.

Including $US46 million in charges, the server maker’s loss widened from $US34 million in the year-ago quarter to $US201 million.

My, Mr Ellison, what big teeth you have.

And now the bad news. Following yesterday’s blockbuster deal, which saw Oracle agree to buy Sun, rescuing it from IBM’s bailed bid, two analysts see up to half of all Sun staff getting a pink slip.

In a classic Larry Ellison flourish, Oracle has taken Wall Street by surprise, stepping in to finish the deal that IBM abandoned.

The US database and CRM software giant will pay $US9.50 a share to buy struggling server maker Sun Microsystems.

Oracle will pay around $US7.6 billion for Sun, or about $US5.4 billion net of cash and debt.

Sun’s stock, which rose 80% on the day IBM’s proposed takeover was announced, is now setting.

What looked like such a promising deal for the struggling server maker will now only be remembered for poor Ernest Hemmingway knock-off headlines.

Yesterday, in apparently testosterone-fuelled, confrontational talks, Sun rejected a lowered IBM offer of purportedly $US9.40 a share. IBM walked away.

One breaking report has IBM-Sun takeover talks near collapse as struggling Sun refuses to accept a lowered offer. Another says IBM has already walked away from the $US7 billion megadeal.

A Wall Street Journal news alert says: “It's possible the two sides are hardening their positions only to strike a full deal in the near future. But for now the stance is confrontational.”

IBM has lowered its bid to buy Sun Microsystems as the two companies come close to finalising the takeover. The deal will still be the biggest in IBM’s history, by some margin.

The Wall Street Journal reports this morning that struggling Sun has accepted IBM’s lower offer of between $US9 and $US10 a share ($US10 to $US11 was originally mooted, representing a 100% premium on Sun’s then market cap) in exchange for a series of concessions.