Fitch may upgrade Sun Microsystems

Fitch Ratings said it revised the Rating Watch for Sun Microsystems Inc.'s issuer default rating of BBB- to positive from evolving following the European Commission's unconditional approval of Oracle Corp.'s proposed acquisition of Sun.

The positive watch reflects a belief that Oracle will successfully consummate its acquisition of Sun since the commission represented the last significant regulatory hurdle, Fitch said.

In the unlikely event the merger agreement is terminated, Fitch said it believes Sun's issuer default rating would be downgraded by at least two notches given the significant deterioration in the company's financial performance, which is primarily attributable to continued weak demand for information technology hardware amid a challenging economic environment.

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