Investors sold Sun Microsystems (JAVA) after weekend boardroom moves endangered a $7 billion merger with IBM (IBM) .

Sun s board of directors rejected IBM s formal offer on Saturday, which prompted IBM to withdraw its bid the next day, according to The Wall Street Journal. Sun shares plunged Monday on news of the deal falling through and problems between Chairman and Co-founder Scott McNealy, who opposes the buyout, and CEO Jonathan Schwartz, who favors the merger. The company declined to comment on the reports.

Analysts applauded the deal when it was unveiled March 17, though some saw it as an attempt by IBM to block competitors, rather than being fully ready to integrate Sun into the business.

Meanwhile, IBM appears to be in for a tough 2009, regardless if the deal goes through or not. Canaccord Adams analyst Peter Misek said IBM s business computing services division could be in for a weak quarter. The group, which emphasizes services and software, rather than capital expenditures for new equipment, has been a critical part of the company s steady showing even in the midst of recessionary cutbacks. Misek on Monday cut his rating on IBM from Buy to Hold. He kept his 12-month target price at $110 a share.

The share price has performed well during a volatile bear market, he wrote. And while we continue to believe IBM is one of the more defensive names within the technology sector, the risk-reward level is more balanced with less than 8% return to our target price.

Bottom Line: Hold
Betting on mergers is always risky.

MGM Surges on Casino Sales

Shares of MGM Mirage (MGM) went on a hot streak after reports the company is considering selling off two casinos as it tries to juggle financing for it massive City Center project in Las Vegas. The stock jumped over 30% during early trading.

The Wall Street Journal reported Monday the casino operator hired J.P. Morgan (JPM) to assist in the possible sale of the MGM Grand Detroit and the Beau Rivage casino in Biloxi, Miss., sales that could raise $1 billion to $2 billion. The casino operator spent the last month scrambling to raise cash to service its $13.5 billion debt, and on March 27 surprised investors with news that it was able to make arrangements with its lenders to make a $200 million payment on the massive City Center resort and gaming complex.

"We are doing our utmost to see that this project continues, keeping thousands of Nevadans employed, CEO and Chairman Jim Murren said. We will continue to make every effort to see that City Center is completed and becomes an even greater economic driver for the region.

Oppenheimer & Co. analyst David Katz said getting top dollar for the casinos would be difficult in a recession, but added that MGM s long-term position still looks strong. Another option for the company: sell a stake in City Center. It s an attractive project for another company to buy into a point the Journal mentioned though it may not pay off immediately.

We believe a stake in City Center would be a positive for MGM in that it could mitigate the near-term liquidity issues around completing the project, he wrote Monday. Nonetheless, we maintain our view that the opening of City Center should have a negative impact on other operators on the Strip given the large-scale increase in supply in a challenged demand environment.

Bottom Line: Hold
If you ve put your chips into a casino stock, it will take a long winning streak in a more free spending economy to be able to walk away from the table at break even.

Provenge Pumps Up Dendreon

Shares of Dendreon (DNDN) continued their sharp increase Monday as investors bought into the Seattle biotech company ahead of a presentation on a vaccine for prostate cancer.

The company was invited Friday to present data on its Provenge vaccine at the April 28 meeting of the American Urological Association, an unexpected move that sent shares up 38% that day. A company spokesman said Dendreon did not yet have all the data it needed for its final trial, which is required by the Food and Drug Administration before the drug can be sold in the United States. The FDA delayed approval in 2007 and requested more evidence that Provenge could support the company s claims for better survival rates.

Jonathan Aschoff, an analyst at Brean Murray Carret & Co., kept his sell rating on the stock and said he believed Provenge would not succeed in its final trial. He attributed the huge Friday share price leap to a short squeeze, in which investors who bet on the stock to go down were forced to sell out of their positions. As of March 10, about 18.9% of Dendreon s shares were held short.

We believe the placeholder at the upcoming AUA annual meeting is non-informative, he wrote Monday. The strong emotions on both sides of this story make for some difficult-to-tolerate volatility, but we believe that selling into Friday s price action rather than covering and running for the hills will prove the wiser move come the end of April.

Bottom Line: Sell
Take profits on this stock while you can. It s based on an all-or-nothing valuation on an unproven drug with a shaky track record.