Barron's just published its take on the frenzied merger activity in the technology sector, and the venerable trade rag got most of the calls right. Intrepid buyout hunters could get their research started from a quality list like this one.
Let's skim over the two megadeals currently in progress; they both look likely to happen, and the buyout premiums seem largely accounted for. Eric Savitz of Barron's is somewhat less enthusiastic than I am about Yahoo!'s (Nasdaq: YHOO ) chances to squeeze more money out of Redmond, but I have to admit that some form of deal is starting to look inevitable. And we agree that Electronic Arts (Nasdaq: ERTS ) will have its way with smaller rival Take-Two Interactive. 'Nuff said. The chances to make big money may be waiting elsewhere.
Potential but unannounced acquisitions might include someone like Oracle (Nasdaq: ORCL ) or IBM (NYSE: IBM ) buying a small software producer with excellent products, such as Tibco Software (Nasdaq: TIBX ) or Nuance Communications (Nasdaq: NUAN ) . These deals would make sense, because the would-be buyers are flush with cash and have deal-happy histories. I'd add that these bite-sized sweetbreads represent a quick and reliable way to grow in currently hot markets.
But my favorite buyout possibility isn't on the Barron's list. Say hello to Advanced Micro Devices (NYSE: AMD ) , which might just have a date with a big blue buyer.
AMD's management lost a lot of investor credibility last year by setting its goals too high, and then not delivering. The stock is crazy cheap as a result, even though AMD's product pipeline is finally perking up with triple-core Phenom processors, the powerful ATI HD 3800 series of graphics cards, and 780-series chipsets with hybrid integrated graphics. Now would be a good time to buy the company.
"Why IBM?" you might ask. It's very simple. The two companies already share a lot of technology, including chip-manufacturing processes. Some of IBM's biggest and fastest supercomputers are built on AMD platforms. And again, Big Blue has lots of cash to spare. Snapping up a major partner and component provider at historically super-cheap prices makes tons of sense. And the chipmaking underdog could use the financial backing of a megacorporation like IBM these days.
Not all of these pairings will happen, of course. But more than a few will, and soon. And even if Tibco and AMD remain independent for a while longer, they both have a lot of growing to do on their own.