Sun Not Shining On Sun Microsystems Ratings

After the European Commission rejected Oracle's (Nasdaq: ORCL) $7.4 billion takeover bid for Sun Microsystems (Nasdaq: JAVA), Fitch Ratings lowered its outlook on Sun to "evolving" from "positive" and said it may lower Sun's debt rating by two notches if the deal falls apart.

Sun's debt rating is currently "BBB-." That's junk status. The European Commission rejected the deal on the grounds that it would hamper competition in the database market.

Sun lost $120 million in its most recent quarter and is facing increased competition from Hewlett-Packard (NYSE: HPQ) and International Business Machines (NYSE: IBM). IBM scuttled a bid for Sun earlier this year.