Java is strong (while not most 'hacker's cup of tea) large amounts of buisnesses like it. I could see IBM cleaning up some of the less pleasant sides of it and continuing to support it slash push it under the Sun brand.

If they were to rebuild the Sparc line this could also be done under the Sun brand. I could see rebuilding sparc to be useful particuarlly in response to the latest Intel AMD debacle. If they made something like KVM (kernel virtual machines) more strongly built into the hardware this would likewise help them push the line.

IBM is a smart company, they could definitely create a decent buisness plan to use Sun to their advantage.

IBM has the POWER lineage of RISC CPUs for servers, which has consistently beaten Sparc in benchmarks for at least the past eight years or so. POWER also has the advantage of having a shared ISA (and thus shared R&D) with IBM's PowerPC-based mainstream products, e.g. the CPUs used in Xbox 360 and Playstation 3.

Thus I think that Sparc will be among the first casualties if this merger goes through.

I think you're right about this one. SPARC hasn't been competitive since the late 90's, so it's hard to see why IBM would care about keeping it alive in the face of POWER -- not to mention, IBM is also one of Intel's biggest server OEM's.