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This year could see increased M&A activity by well capitalised tech companies that need to spur growth, according to a new report by GigaOm Pro.The report, written by Jake Lynch (from The Street) and Kevin Kelleher, looks at likely buyers based on their cash, debt, and competitive factors such as consolidation of competitors in their key markets and the need to build stronger brands.
Then, it names five companies likely to do more big acquisitions in 2011, and names some possible targets.
- Microsoft. In mobile, a big hardware acquisition like Nokia or Research In Motion is possible, but small companies with interesting mobile ad technology — like Mobclix, Jumptap, Millennial Media, or Where — are more likely. Microsoft might also deepen its presence in social computing and keep the pressure on Google by buying a social ad targeting company like Lotame, Blue Kai, or Audience Science, or with a longshot acquisition of LinkedIn.
- Cisco. Storage and virtualization are natural areas of expansion for the troubled company, but a big buy like EMC or VMWare (which have much higher P/E ratios) would probably be too much to swallow. Instead, Cisco could buy smaller companies with specific technologies like Aspera (high-speed file transfer), Xsigo (virtual I/O for data centres), Vyatta (open-source router software). Eucalyptus and Cloud.com could help Cisco in cloud computing, and Jive Software could help in social collaboration. In mobile, Bridgewater Systems, which provides infrastructure to mobile carriers, might be a natural fit.
- Hewlett-Packard. A bigger push into consumer living rooms might spur HP to buy HDTV giant Vizio, or perhaps smaller media-delivery hardware companies like Roku. Mobile ad companies like Jumptap, Millennial, and Where could help HP’s WebOS platform as much as they could help Microsoft with Windows Phone. Cloud computing buys might include Appirio, OpsCode, rPath, or Puppet Labs.
- IBM. Terracotta, which provides open-source software to make cloud-based applications more efficient, is named as a likely target. (UPDATE: Too late — German company Software AG bought them on Monday.) Other possibilities include Citrix (a big virtualization technology provider), Bazaarvoice for business social computing, and clean tech startups. Big publicly traded data storage and management vendors like EMC and NetApp are longshots.
- Oracle. Cloudera, which resells the Hadoop open-source data storage and processing platform used by Facebook and other big companies, is a top target here. CloudBees (which helps companies deploy Java apps in the cloud) and Box.Net (online storage) are also mentioned.
Of course, this is all a guessing game — the report didn’t predict Microsoft’s interest in Skype, although it pegged Cisco as a possible buyer. Nonetheless, it’s an interesting read — and you can get it for free if you sign up for a trial.
GigaOm Pro is the paid research arm of GigaOm, which just received a $6 million investment from publishing giant Reed Elsevier to build out that part of the business.