Rumors flying: Sun discussing going private

[UPDATE: Btw, we’ve since got good reason to believe, from a well-placed source, that Silver Lake is not involved, if there is a deal at all. Meanwhile, here’s our Mercury News story, in Saturday’s paper.]

This is turning out to be a busy Friday. First, there was the Siebel-Oracle story. Business Week is now spreading word of Sun talking about going private. We’ll have more thoughts later, from people who have long thought Sun needs restructuring. According to BW:

[Sun Microsystems CEO] Scott McNealy is considering taking Sun private with the help of Silver Lake Partners, says a hedge-fund manager close to McNealy and the private equity fund. Silver Lake has done LBOs for Seagate Technology (STX ) and SunGard Data Systems (SDS )…

This manager sees an LBO offer of $5 to $5.50 a share. Sun’s cash stash of $7.5 billion, or $2.50 a share, makes an LBO doable, he says. The idea is to shrink Sun by selling assets, bolster its core hardware, software, and service businesses, and go public again. Spokespersons for both Sun and Silver Lake declined comment.

We should note quickly that McNealy and Sun have denied this is the case. Still, McNealy has long moaned about Sun’s stock being too low. Until the story, it was around $3.54. The rumors have it up today, but not by much, at $3.62.

A Silver Lake spokesman said: “On the record, we decline comment.” But we’re not going to read anything into that, because from past experience, we know their policy is to decline comment on most rumors, whether or not there’s any merit to them.