BoomTown is not going to go all servers and Solaris on you, as I am leaving the complicated details of the collapsed IBM (IBM) bid for Sun Microsystems (JAVA) to Digital Daily’s John Paczkowski to sort out.

But perhaps the best headline and first sentence of the plethora of stories about the $7 billion buyout debacle, which seems sure to get horribly messy now, is from Andy Greenberg of Forbes.com:

The headline: “Sun May Be Pulling A Yahoo!”

And lede: “Sun Microsystems is facing its Jerry Yang moment.”

I wonder if every failed tech merger with a squabblefest and a board in chaos will now be accused of blowing it, as most think the Yahoo (YHOO) co-founder and former CEO Yang did in rejecting the $41 billion offer from Microsoft (MSFT).

In an interesting aside, speaking of the chaotic Sun board, one of its members is none other than Peter Currie.

Currie (pictured here) just inherited another potential mess over at Facebook, when he agreed to step in to take over as a financial adviser to the social-networking site, which abruptly replaced CFO Gideon Yu last week.

Sounds like Currie, the former Netscape CFO and investor–who knows from unnatural disaster from his long years in Silicon Valley–has his hands full now.

About three weeks ago, BoomTown surmised that the they’re-practically-giving-them-away prices for some prime but distressed tech companies–combined with cash hordes by stronger players–would eventually result in some acquisition activity sooner than later.

One combination I flagged most prominently, based on several sources, was that IBM would try to grab Sun Microsystems.

And today, The Wall Street Journal reported that that was indeed the case. Talks, the story said, were talking place, with a price of about $6.5 billion as a possibility, a 100 percent premium to Sun’s current market valuation.

We’re not so sure IBM will pay that much in this market, but it’s a good idea for the pair.

Such a deal has been long rumored in Silicon Valley, so I wasn’t the first to suggest such an obvious move, and these talks come as a surprise to very few, which would rescue the long-declining Sun and give heft to IBM’s Internet aims.

In fact, on Feb. 26, I wrote:

“IBM Buys Sun:

I mean someone has to buy Sun Microsystems (JAVA)–now hovering in the $5 a share range with a market valuation of just $3.62 billon–right?

But it’s not going to be Hewlett-Packard (HPQ), despite a deal announced just yesterday in which HP will distribute and provide support for Sun’s Solaris operating system on a line of HP servers.

Analysts dismissed the deal as meaningless in terms of true revenue, with one noting that it did not mean HP would buy Sun either, especially for its server business, because of redundant hardware products.

That leaves, according to many observers I spoke to: IBM (IBM), which competes with Sun in the server business too. Many think the products fit better together and IBM has a $115.3 billion valuation, so the purchase would be doable.

The server business is sucking wind, according to a report earlier this week, due to the global economy, so finding safe harbor for Sun is something Wall Street seems to be looking for.

Of course, Sun CEO Jonathan Schwartz curiously did use the term ‘Live Free or Die’ in his blog post about the HP deal yesterday–although he was not referring to Sun’s independence, but noting the phrase was ’synonymous with software independence, innovation and intellectual property freedom.’”

I guess for Sun, freedom’s just another word for something left to sell.

The other deal I mentioned as a major possibility is also commonly bandied about in Silicon Valley and is considered to be just a matter of time and price: Google (GOOG) buying hot microblogging service Twitter.

Let the let’s-make-a-deal activity begin!

As BoomTown reported earlier today, AOL was abuzz with the rumors that former execs from the online service’s glory days, including still controversial former CEO Steve Case (pictured here), might make an appearance at a huge staff pep rally called by its new CEO Tim Armstrong.

And so Case did show up in front of a cheering crowd this morning, along with former AOL vice chairman Ted Leonsis.

Considering that many at Time Warner (TWX), which owns AOL, still harbor resentment towards Case about the disastrous merger between it and AOL a half-decade ago, the move is groundbreaking for the troubled online service and perhaps a sign that it is finally time to move forward.

In related news, Sasquatch will appear on the Time Warner-owned CNN’s “Larry King Live” show tonight.

The appearance by Case took place on AOL’s former HQ in Dulles, Virginia, on the tented lawn of the sprawling campus for the company, which only a decade ago was the dominant online powerhouse.

The event was broadcast to the AOL empire worldwide, reaching thousands of employees, and included all of AOL’s top execs and several from Time Warner, such as General Counsel Paul Cappuccio and CFO John Martin.

Leonsis, who gave a “lucky” green tie to Armstrong, engendered cheers as he spoke of the importance of change.

But it was Case’s entry that was a shock to the standing-room only audience of 1,000. He told the crowd that he would be a “cheerleader on the sidelines” for AOL.

Both Case and Leonsis talked about putting the past behind the service–and there is a lot of past to put behind, I might add, between AOL and the media giant–and were very supportive of Armstrong.

Armstrong, who was a key advertising exec at Google (GOOG), made the point of joking that Case and Leonsis were “on the payroll” at AOL again.

Armstrong focused mostly on AOL products, rather than its troubled history, employee morale and the importance of reviving the famous but tarnished brand.

And to get AOLers jazzed again about reviving the service, Armstrong asked rhetorically: “Are you committed to putting America back online?”

As soon as he got his new job last week, new AOL Chairman and CEO Tim Armstrong sent out a rather hopeful email to the troops–his first communication as the latest leader of the ragtag online service.

“I’m really looking forward to seeing you and would love to hear your thoughts and suggestions,” wrote the former Google (GOOG) exec Friday (who alarmingly kind of resembles this Elvis image), “on how to make AOL and its sister properties the most powerful brands on the Internet.”

Well, one can hope!

To goose that dream, although he still does not officially start in the job until April 7, Armstrong is also addressing all the troops tomorrow at 11 am EST and has chosen to do so from, of all places, AOL’s old center of power in Dulles, Virginia.

AOL staffers I spoke to also hope most of all that Armstrong will quickly and transparently lay out plans for a spin-out of the Time Warner (TWX) online unit from the media conglomerate, where it has languished for years.

“Armstrong would not have taken the job if the plans for a spin out of AOL were not in place and it’s in everyone’s interests to signal that it’s a go right away,” said one source close to the situation. “The only catch is the poor economy, but even that should not prevent Time Warner from doing what’s right to finally fix AOL.”

And sources said Armstrong could further up the ante tomorrow and help raise the layoff-weary morale by having some former AOL execs from its glory days as the top online player in person at the event.

Several sources said one exec most likely to make an appearance is Ted Leonsis (pictured here), one of AOL’s most colorful top early execs and a longtime inspirational figure within its ranks.

Unlike most AOL execs from those days, many of whom were eventually run out on a rail, Leonsis also stayed on through its disastrous merger with Time Warner and beyond.

But, like all of the Dulles complex–which was once the bustling worldwide HQ for AOL–Leonsis finally left the company, after a falling out with the management regime that Armstrong just hipchecked out of power. He is now AOL’s vice chairman emeritus.

Both CEO Randy Falco and President Ron Grant moved AOL’s locus largely to New York, and minimized the staff and influence at Dulles, where most of AOL’s products have been made since its origins in the early 1990s.

“It’s a smart move to go to [the Dulles staff] directly first…the last regime pretty much shut them out…and that created bitterness, when we need to be unified,” wrote one AOL insider to me in an email.

(Sidenote: As the AOL beat reporter at the Washington Post back then, I actually went with then-PR head Jean Case to look over what became the Dulles facility, to see if it would be a good place to expand to; previously, AOL was located in nearby Vienna, behind a car dealership.)

A Leonsis visit at AOL will be like old home week, although some are hoping too that former AOL CEO Steve Case could also make an appearance. He and Leonsis still make online investments together.

But that might still be deeply controversial within Time Warner, where Case and also former Time Warner CEO Jerry Levin are widely blamed for situation that the company found itself in when the Web 1.0 bubble burst and AOL’s once vaunted valuation collapsed.

Although Case and Time Warner CEO Jeff Bewkes have since moved on, bygones have not been bygones within Time Warner.

And, while it is often denied by top execs, AOL has suffered because of ill-hidden grudges, which have partly prevented it from being revived, even as other Internet giants have been born in the interim.

Ironically, many of the current crop of shooting stars owe a lot to the pioneering and innovative AOL products, including: its AIM and ICQ instant messaging services, which echo an early version of Twitter; the “Buddy List,” which was all about friending; and its deep social networking roots, with chat rooms and profiles that were the Facebook of its day.

The question for Armstrong is: Can AOL go home again?

About 10 days ago, BoomTown posted a piece titled, “With a King’s Ransom in Cash, Why Is There Still No Buying Spree in the Tech Space Yet?”

Noting the big cash hordes being held by a plethora of giant tech and Internet companies and their strong cash flows too, even in the midst of the economic meltdown–I wondered when the mergers and acquisitions would ever begin.

The answer is two-fold: No one wants to buy when prices could just keep going down. And no one wants to sell at all-time lows.

Another issue? While public companies have a market value, as low as they might be, noted a prominent Internet player, the bulk of tasty private ones no longer have a set price, since there have been no sales of late.

Well, that just won’t do! So, in the interest of jump-starting the economy–I mean, there are investment bankers out there running low on caviar and Dom, folks!–here are three suggestions for interesting deals.

IBM Buys Sun:

I mean someone has to buy Sun Microsystems (JAVA)–now hovering in the $5-a-share range with a market valuation of just $3.62 billon–right?

But it’s not going to be Hewlett-Packard (HPQ), despite a deal announced just yesterday in which HP will distribute and provide support for Sun’s Solaris operating system on a line of HP servers.

Analysts dismissed the deal as meaningless in terms of true revenue, with one noting that it did not mean HP would buy Sun either, especially for its server business, because of redundant hardware products.

That leaves, according to many observers I spoke to: IBM (IBM), which competes with Sun in the server business too. Many think the products fit better together, and IBM has a $115.3 billion valuation, so the purchase would be doable.

The server business is sucking wind, according to a report earlier this week, due to the global economy, so finding safe harbor for Sun is something Wall Street seems to be looking for.

Of course, Sun CEO Jonathan Schwartz curiously did use the term “Live Free or Die” in his blog post about the HP deal yesterday–although he was not referring to Sun’s independence, but noting that the phrase was “synonymous with software independence, innovation and intellectual property freedom.”

Google Buys Twitter:

A lot has been written about the supposed “threat” of Twitter to all Web, media and communication companies in the known universe. (How we are all scared by a start-up whose name is so flighty is a question for another day.)

I am not so much convinced, although Twitter certainly is on a roll from a hype and growth perspective.

And I do understand why Twitter–flush with venture funding and an allegedly low burn rate–might want to bide its time to see what happens and not sell out too early.

But while the hot microblogging service declined to sell to Facebook, it might want to reconsider if Google (GOOG) or Microsoft (MSFT) or a big telecom company comes calling with, say, a $1 billion check.

Why? Simply because Twitter–while it says it is poised on the verge of announcing its grand plan to make money–is operating in an arena I have seen many other shooting stars in, traversing a very dangerous crevasse of hype and expectation.

Due to that, it has a very big red target on its back, one that a competitor in the status space–such as the spurned Facebook, whose update business is much bigger–will not ignore.

Right now, Twitter could ask for a lot, as one of the only Web 2.0 companies that everyone is uniformly excited about.

It might want to think about how such excitement can turn rather quickly. Digg–which was almost bought by Google–might give them some advice on how quickly the winds change, for example, as can many too many others.

Microsoft Buys Anyone:

With its $20.7 billion in cash and still casting about for a really bold Internet strategy–sources tell me that newly installed digital head Qi Lu just wrapped up a meeting-rich look-see at the path ahead, including a day-long session on Super Bowl Sunday–Microsoft really should stop futzing around with the PowerPoints and jump right in.

It already has an investment in Facebook. While the social-networking phenom might not be for sale, one wonders if a $10 billion offer and a promise of autonomy might not be well-considered at Facebook’s Palo Alto HQ.

Or what about the social-networking/communication assets of AOL and its low-margin advertising business, with owner Time Warner (TWX) keeping the media part of the unit? Rival Google actually wants to keep that AOL search business, so sticking it to that company would be an added bonus.

As to the continual flirting with Yahoo (YHOO), it is getting to be as annoying as Chuck Bass and Blair Waldorf’s persistently unconsummated roundelay on “Gossip Girl.”

But, of course, once again this week, Microsoft CEO Steve Ballmer said he was interested (sort of, but not), while Yahoo’s CFO Blake Jorgensen said Yahoo was too (sort of, but not).

Said Ballmer at a strategy gathering: “They have share. We don’t have share. They have a huge team. We’ve got a much smaller team….I’m hoping that’s a reasonable conversation to have with new management at Yahoo.”

Said Jorgensen at an investor’s conference: “We’re not opposed to doing a deal…[but] it’s extremely difficult to draw a line down the middle of the organization and split it into two pieces.”

Aaaaaagghhhh!

Dear Steve: Yahoo is the only way Microsoft is ever going to gain the share it so covets, and it looks like new CEO Carol Bartz is at least showing that Yahoo does not have to be roadkill.

Dear Carol: Get while the getting is good because 20 percent is still pretty weak, compared to Google’s 70 percent, and competition is only going to get pricier.

And even though Ballmer could not resist and made a jibe at former CEO Jerry Yang–with whom he famously tangled in the botched acquisition attempts–noting “I don’t want to be known as the Jerry Yang of this market,” everyone knows these two crazy kids belong together.

So kiss, please, declare your undying affection and intent to stick it to Google, and pronto, so we can all move onto the next episode.

Even in the midst of the economic meltdown, consider these mega-billion-dollar cash hoards of big tech companies:

Microsoft (MSFT): $20.7 billion

Cisco (CSCO): $29.5 billion

Apple (AAPL): $25.6 billion

Intel (INTC): $11.8 billion

Oracle (ORCL): $10.6 billion

Hewlett-Packard (HPQ): $10.2 billion

Google (GOOG): $15.9 billion

Yahoo (YHOO): $3.5 billion

Of this moneybags list, Apple and Google have zero debt, with the others not having much at all to speak of. Better still, all typically generate a whole lot of cash flow quarterly, even in the downturn.

And since very few tech companies like to hand over dividends or buy back much stock–kind of a minor sacrilege in the space since it means they have no innovative new ideas to fund–BoomTown asked a big exec at one of these companies when the buying spree of both public and private companies might begin.

“Like everyone else, we are waiting for the bottom,” said the exec. “So who knows?”

Said another: “No one wants to buy when prices could just keep going down. The trick is to buy before the really great deals out there collapse.”

And, even as some tasty targets are suffering and might need a lifeline, none of them want to necessarily sell out at all-time lows either.

“We will start eating our toner and paper first,” joked one start-up exec, whose company is increasingly strapped for cash, even after a number of cost-cutting moves.

Interestingly, the only standout in the buying game has been Oracle, which has been in bargain-hunting mode, making 10 acquisitions for about $750 million in the last year, according to an article in The Wall Street Journal today.

While this amount is small potatoes to Oracle, which has typically been known for doing huge merger and acquisition deals, it is still some activity in a decidedly inactive space.

Oracle has especially focused on private firms, as the private-equity investing and venture capital has dried up and IPOs are an impossible dream.

And while another well-known M&A addict, Cisco, has recently issued $4 billion in debt to fund more purchases, and Microsoft execs have noted recently that it is a buyer’s market, it seems Oracle CEO Larry Ellison is the only one currently putting his big money where his big mouth is.

So, when do you think tech companies should commence to gobbling too?

Here’s a joke an exec at AOL recently sent me:

Q: How many Yahoo and AOL dealmakers does it take to screw in a lightbulb?

A: None–you don’t need light if you’re never going to sign a merger agreement.

Ahahahaha. Ha.

Well, not really.

Time Warner (TWX) CEO Jeff Bewkes certainly was not laughing much Wednesday, discussing the options for the media giant’s long troubled online unit at a UBS investor conference.

Among the gems from Bewkes, according to paidContent: “I’d like to get it resolved, meaning clear…so AOL can be seen and valued…. We need to do it fairly soon and we’ve been working hard on it.”

Calling AOL what it is–a third-place player in the portal sector–Bewkes acknowledged the obvious, that it’s a tough road in all sorts of ways, especially in the all-important advertising market, “even though some excellent work is being done on cost cuts, programming and traffic.”

Indeed, especially compared to its erstwhile suitor Yahoo, AOL execs have been toiling mightily to cut while also innovating.

Earlier this week, for example, AOL unveiled interesting changes to its social-networking and communications assets.

But those efforts might be just spitting into the wind, of course, with no end in sight, as the company struggles to differentiate itself from the pack.

And while Bewkes mentioned alternatives at the UBS event–including with Google and Microsoft, as well as Yahoo and a possible spinoff of AOL–he still used a lot of mights and might-nots in his talk.

But sources close to the situation said Time Warner was actually very seriously looking at a variety of configurations to sell off pieces of AOL.

AOL’s owner, especially Bewkes, sources said, has become weary of all the uncertainty and lack of ability to complete a deal with Yahoo (YHOO), after months of trying, especially since Yahoo is still without a CEO and has just this week undergone wrenching layoffs.

“Yahoo has trouble making decisions in the good times, so you can imagine how it is now,” said one source.

So, according to people with knowledge of the situation, new ideas center around selling off the communications and advertising parts of AOL, as well as its access business (which has been long expected).

Obvious buyers for the communications unit, now called the Peoples Network, would be both Microsoft (MSFT) and Google (GOOG), which already owns five percent of the entire AOL unit.

The same is true for the advertising arm, now called Platform-A, which is perhaps AOL’s most lucrative asset.

But owning and running the lower-margin business, it is thought, is going to get increasingly hard as Microsoft and Google go for big scale.

That leaves the content properties, some of which are among the most trafficked on the Web, which could stay with Time Warner, either as a separate unit or as part of Time Inc.

The premium ad sales for the content could still be sold by using internal resources.

If that is done, it is even possible that Time Warner would retire the somewhat tired AOL brand name.

“We’re looking at all sorts of ways to make the most of this asset,” said one source. “After all, we can’t just wait for Yahoo to figure out what it wants to do.”

Indeed, it cannot.

Please see this disclosure related to me and Google.

This morning, AOL will launch an updated look for its Bebo social-networking property, with a new “social inbox” profile for its users.

The inbox, which you can see below in the old and new versions, essentially gives its users a one-stop destination, with aggregated social feeds from across the Web, multiple email accounts and media recommendations.

But, according to sources with knowledge of AOL’s plans, the online service is preparing a more radical series of announcements after the new year, well beyond its release today.

Interestingly, the changes to its social-networking and communications properties yet to be announced have been among the things that have impressed Yahoo (YHOO), whose execs have been briefed on the changes, as part of the never-ending talks with the Time Warner (TWX) about buying its AOL asset.

That includes offering AOL’s various social-networking tools–such as chat rooms, news feeds and instant messaging–to be easily embedded by any Web site. The service will be called “Site Social,” with plans to use AOL’s advertising platform to help monetize the offering.

In addition, the renovation of the Bebo profile pages will continue, with more innovative features, including the introduction of an interactive “timeline” that shows a person’s online “lifestream” in a scrolling fashion.

BoomTown has seen the timeline–in which events of any kind can be depicted, from your book club schedule to a trip to Hawaii.

While it looks like eye candy at first, it is also pretty useful–especially a mobile version. And it is definitely the most visually striking version of a news feed that is offered by competitors.

“It is part of a left brain/right brain strategy to improve our services, distinguishing them from the pack,” said one person familiar with the upcoming changes at AOL. “But we also have all these tools and want to reach out to publishers who need to socialize their sites and find it hard to do so.”

The move today to update Bebo, though, is strikingly similar to redesigns that have been recently rolled out by large Web players like Microsoft (MSFT) and Yahoo.

All are attempts to offer a competing product to popular social-networking sites like Facebook and News Corp. (NWS) unit MySpace, where users have flocked. (News Corp. is the owner of this Web site.)

Those two companies have also been making moves of late to allow consumers to aggregate their disparate piles of online information in through connective offerings that allow them to pool all kinds of Web content and communications in one place.

AOL is hoping its efforts will focus users more on Bebo, which it bought for $850 million in March. Bebo is one of the larger social networks, although it is not popular in the U.S. and lags behind the leaders like Facebook.

AOL execs are hoping to change that by changing the game, focusing on Bebo’s strong media offerings and making it the centerpiece of its social-networking and communications unit, run by former Bebo head Joanna Shields.

AOL’s People Networks unit, which includes Bebo, AIM and ICQ, has an overall audience of 92 million unduplicated users worldwide, said AOL, referencing a recent comScore (SCOR) survey.

“The current fragmented social networking environment makes keeping up-to-date with others increasingly difficult,” said Shields, who is now president of People Networks, in a press release statement. “By opening up our network to the most popular sites and allowing our users to pull in the best of the Internet, we are creating an environment where everyone can easily and effectively manage their online lives, no matter where the individual pieces reside.”

The launch companies for the new inbox include: Twitter, Flickr, Del.icio.us, YouTube, Gmail, Yahoo! Mail, as well as AOL-owned AIM and AOL Mail. In addition, all AOL and AIM users now can now log into Bebo using their credentials and create a profile.

Here’s more specific info, from the AOL press release:

Today’s enhancements to Bebo.com, the first in a series of scheduled releases for early 2009, include:

• Media Favorites: A new recommendations engine built on the foundations of Bebo’s Open Media Platform delivers the most relevant online entertainment (including video, music, groups and games) into one place. Media Favorites are based on users’ stated preferences and aggregated data such as: what their friends are watching and listening to and what people like them like, subject to appropriate privacy settings. This feed pulls in current Bebo content and group subscriptions, making it easy to get a quick snapshot of all personalized content. Bebo already boasts one of the most extensive online media offerings available, with programming from over 500 media companies including MTV, ESPN, CBS and the BBC.

And here are the before and after Bebo profiles (click on the images to make them larger and keep clicking to make them clearer):

OLD BEBO

NEW BEBO