Time is not on Oracle Corp.'s (ORCL) side.

The success of Oracle's $7.4 billion acquisition of Sun Microsystems Inc. (JAVA) rests on the speed with which the European Commission completes its extended antitrust review of the deal to combine the hardware and software giants. Growing evidence suggests that the review is costing Sun business, potentially making it a much weaker entity when the deal closes.

On Monday, Oracle Chief Executive Larry Ellison said the antitrust delay is costing Sun $100 million a month, according to media reports. His comments follow a report from research firm IDC that among major server suppliers last quarter, Sun saw the largest revenue drop, resulting in market-share losses.

According to people familiar with Oracle's thinking, the company expected the commission's ruling would more closely reflect that of its U.S. counterpart, which quickly approved the deal. The surprise calls into question some of the rationale Oracle made for its purchase of Sun when the companies agreed to the deal earlier this year.

"My suspicion is also that they were perhaps surprised by the EU's move," said Brent Williams, an analyst at the Benchmark Co. of the European Union.

Sun did not respond to requests for comment. Oracle declined to comment.

While the delay won't have much of an effect on Sun's software business, its business selling hardware could suffer, Williams said.

In April, Oracle President Safra Catz highlighted Oracle's ability to quickly integrate Sun into its existing businesses as part of the company's rationale for the deal.

"As you know, we have a track record of integrating acquisitions very rapidly, and this time will be no different," she said in a conference call discussing the acquisition. "We will combine the software assets quickly after closing, as we have done with all our previous acquisitions.

But the delay before the deal's closing is what could hurt Oracle in this case. In its most recent quarter, Sun's revenue fell 31% to $2.6 billion as the company posted its fourth straight loss.

Of course, Sun's business could receive a boost when the deal closes, if customers return to the high-end server maker after the uncertainty surrounding the deal passes.

Currently, customers have delayed purchases of Sun's equipment on concerns about what Oracle plans to do with Sun's business selling high-end servers, according to electronics distributor Avnet Inc. (AVT.

Executives that manage corporate data centers have been delaying purchases overall, an Avnet executive said, but the trend has been more pronounced with Sun equipment.

The downturn, in effect, could give Oracle and Sun more time to complete the deal, as companies aren't replacing old equipment in an attempt to cut costs. But the longer the delay, the more customers may return to the market and purchase equipment from rivals such as Hewlett-Packard Co. (HPQ) and International Business Machines Corp. (IBM).

Benchmark's Williams said most corporate data centers have equipment from Sun as well as its rivals, and lost sales at Sun could also come from aggressive sales pushes from its competitors while the Oracle/Sun deal stagnates.

"All of those guys have H-P and IBM (equipment) as well, so what's undoubtedly happening is that H-P and IBM guys are wading into the fray," he said.

Oracle shares closed down 16 cents to $21.41 but have risen in late trading to $21.42. Sun shares closed 5 cents lower at $9.06 and are unchanged in recent trading.

-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155; jerry.dicolo@dowjones.com