And this is only the beginning, predicts super investor Marc Andreessen, who was involved in two of these. He sits on the boards of eBay and HP.
Andreessen thinks every enormous older tech company will follow suit, he told Bloomberg’s Emily Chang at the Salesforce Dreamforce Conference on Wednesday.
“If they’re more than 20 years old, then they will probably benefit from being broken up, and many of them will probably be forced to break up if they don’t do it voluntarily,” he said.
That’s why “I feel so good I’m involved with HP and eBay … especially actually with HP. It’s really getting ahead of what would probably happen anyway.”
He calls these breakups “a sign of evolution, the industry is changing … there is the opportunity to do more and better if you’re smaller and more nimble.”
Large multi-national companies have so much technology in so many industries, all being targeted by startups, many of them funded by his superpowerful venture firm, Andreessen Horowitz. “Your ability to fight five- or six-front wars at the same time is just really challenging,” he explains
Splitting up means “having smaller, more-independent companies” that are “able to get more aggressive.”
But there’s a second reason why so many activist investors are circulating the waters. These huge companies are “all supercheap. And this is something that’s widely misunderstood, there’s a conventional view that there’s this little tech bubble,” he says, but the big companies are trading at what he says is a low price/earnings ratio.
“The really big ones like Oracle, Cisco, and some of these others, many of them are trading at single digits price/earnings. And a lot of these companies have tons of cash on the balance sheet. That’s what’s attracting all these activists.”
He didn’t name the companies he think will be forced to break up, but he indicated “you could go down the list” of companies older than 20 years.
That list includes Oracle, Cisco, Microsoft and, most especially EMC, which is being pressured right now by activist investor Elliott Management to breakup and sell off VMware and maybe other units.
We’ll see. Some of them are not selling off their parts but going private. Dell did that, as did BMC and, more recently, Tibco.
Here’s the video.
Disclosure: Marc Andreessen is an investor in Business Insider.