4 Strategically Smart Technology Mergers

Kevin Berk profile picture
Kevin Berk

Google's purchase of Motorola Mobility (MMI) had an electricifying effect on tech stocks. The market expects more acquisitions because cash piles at the major technology companies are enormous and growing rapidly. While I would recommend that most of the majors boost their dividends and some companies increase buybacks, they should all be trying to solidify their strategic positions. Given the relatively low valuations of the majors and high cash balances, all these mergers should be done with cash [except Amazon (AMZN) - use that inflated stock!] However, many acquisitions don't make strategic sense [Cisco (CSCO) buying Flip?!?]. Here are four potential merger pairs that make strategic sense to me. I have no inside information about any of these - they are pure speculation.

Oracle (ORCL) should buy Dell (DELL). Sure, while this would amount to a tripling down on the hardware space, but it would give them the scale to more effectively compete for corporate clients for integrated deals. Dell is cheap, is growing again and has lots of cash. Given Dell's ongoing strength in the enterprise and governments, Dell is the PC maker with the best overlap with Oracle and has a strong presence in Data Centers as well. Dell's stock has been beaten up as the iPad and Macbook Air have sucked a lot of the sales and profitability out of the consumer laptop market. In Dell's case, they are more insulated as a lot of their profit comes from corporate sales. As a small plus, it might give ORCL's fledging consumer software products a fighting chance (OpenOffice preinstalled?).

Apple (AAPL) should buy Adobe (ADBE). Given how much Apple has publicly beaten up Adobe over software bugs and being proprietary, this would require a big change of heart on the part of Steve Jobs. However, he could easily spin the story: "Apple

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Kevin Berk profile picture
Kevin Berk is a strategic investor, entrepreneur and an expert in online media. He helped develop online ventures at CitySearch and Disney, and was instrumental in the merger of TicketMaster and CitySearch and the combined company's IPO. (It is now owned by IACI.) He founded Zeal.com in the online search and directory space. He then led the advertiser products team at LookSmart before co-founding online job search company YorZ and writing his blog, Berk Sure Has a Way (http://www.berksurehasaway.com/). Kevin combines an insider's understanding of online content, search and advertising with an eye for stocks and a clear writing style.You can follow him on Twitter: http://twitter.com/#!/kevinberk

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