Feeds:
Posts
Comments

Posts Tagged ‘Cisco Systems’

Article from SFGate.

“Three years from now, the data equivalent of every movie ever made will cross Internet networks every five minutes, according to Cisco Systems predictions. How to manage all that information is what will be driving technology mergers and acquisitions in 2012.

In a bid to transform that torrent into profits, a cash-rich industry is poised to surpass 2011’s almost $200 billion volume of announced mergers and acquisitions. Companies such as Cisco and IBM are searching for deals that will boost their capacity to provide new storage, analytics and security services to enterprise customers.

Big data, mobile and cloud technologies will lead to “bold investments and fateful decisions,” market research firm IDC said in a recent report. The volume of digital information may balloon from 2.7 zettabytes this year – the equivalent of filling 2.7 billion of Apple’s priciest iMacs to capacity – to 8 zettabytes by 2015, according to IDC.

“The speed at which technology innovation moves is such that you can’t miss a step,” said Jon Woodruff, the San Francisco co-head of technology investment banking at Goldman Sachs, the industry’s top adviser on deals last year. “Every tool has to be used for speed and nimbleness sake, and M&A is one of those significant tools.”

Abundant cash and investor pressure to jump-start sales growth will also propel deal-making. Cash levels have expanded 21 percent in the past year to $513 billion, based on holdings of the 35 companies that comprise the Morgan Stanley Technology Index.

Large companies will be leading the charge. Hewlett-Packard, Google and Microsoft led a 36 percent gain in technology deals last year, outpacing a 4.1 percent advance for all M&A worldwide.

In one of the biggest deals last year, HP agreed to buy Autonomy Corp. for $10.3 billion in a bid to build its software business and scale back on its PC manufacturing. Though viewed negatively by some investors, the move will enable Hewlett-Packard to offer database search services and other cloud-related services for business. CEO Meg Whitman said in November that the company doesn’t plan “large M&A” this year, though it may seek small software deals.

Cisco, which has made about 150 acquisitions in its history and has $44.4 billion in cash on the balance sheet, said in November that it will “continue to be aggressive in acquiring technologies.”

Bigger volume

“This year’s technology deal volume could be bigger than last year’s and 2007’s,” said Chet Bozdog, global head of technology investment banking at Bank of America.

Industry takeovers in 2007 reached $264.4 billion, the biggest year since 2000’s record high of $585.2 billion.

“Convergence between hardware, software and services will continue to add products to the same sales chains,” said Bozdog, who is based in Palo Alto.

Cloud computing, which allows companies to access information over the Internet from external data centers, and the shift from desktops to mobile devices, will continue to be “huge multiyear trends,” said Drago Rajkovic, head of technology mergers and acquisitions at JPMorgan Chase.

As part of this trend, SAP, the largest maker of business-management software, agreed to buy SuccessFactors for $3.4 billion in December to create a “cloud powerhouse,” co-CEO Bill McDermott said at the time.

Gaining patents

Google announced in August it would buy Motorola Mobility Holdings for $12.5 billion in its largest acquisition, gaining mobile patents and expanding in hardware. Microsoft purchased Skype Technologies for $8.5 billion in October, the biggest Internet takeover in more than a decade, in an effort to catch Google in online advertising and Apple in mobile software.

While Google and Microsoft paid in cash for their deals, the purchases didn’t put a dent in their funds. Microsoft’s cash and equivalents jumped 41 percent from a year earlier to $51.7 billion, based on its latest filing, while Google increased cash by 28 percent to $45.4 billion.

Apple, which has no debt and the most cash among technology companies at $97.6 billion, said Jan. 24 that it is discussing ways to spend its funds and would consider acquisitions.

“There’s more cash in technology than in any other sector and the low level of debt makes it very easy for companies in the industry to buy growth,” said JPMorgan’s Rajkovic, who is based in San Francisco.

Affordable targets

“As cash piles have increased, some potential targets have become more affordable. Shares of F5 Networks, whose software helps companies manage Internet traffic, lost 18 percent of their value in 2011 even as sales grew 31 percent. Riverbed Technology, a provider of equipment to boost networks’ speed, lost 33 percent while its revenue increased 32 percent. Shares of Acme Packet, a maker of devices that help networks transmit phone calls and video, dropped 42 percent last year while sales jumped 33 percent.

“You will see more M&A than last year, with some very strategic technology companies involved as valuations have become more reasonable,” said Larry Sonsini, who co-founded Wilson, Sonsini, Goodrich & Rosati, the law firm that brought Apple public in 1980.”

Read more here.

Read Full Post »

Article from SF Gate.

“Hewlett-Packard, the world’s largest PC-maker, has offered to buy Fremont’s 3Par Inc. for about $1.6 billion, topping Dell‘s bid for the maker of data-center equipment and software.

The bid of $24 a share in cash is 33 percent higher than Dell’s offer, HP said Monday in a statement. Dell offered $18 a share in cash, or about $1.15 billion, for 3Par on Aug. 16.

HP and Dell are using acquisitions to challenge Cisco Systems and IBM in the market for data-center products and services, which generate higher profits than desktop and laptop computers. 3Par sells hardware and software that make it easier and cheaper for companies to store information. Its stock rose past HP’s offer, signaling that some investors expect a bidding contest.

“One of the growth areas in technology is in the enterprise storage space,” said Joel Levington, managing director of corporate credit at Brookfield Investment Management Inc. in New York. “3Par’s products fit well in there. It’s an easy way to gain product breadth.”

HP said on a conference call that it has been working on the proposed acquisition since before the departure of Mark Hurd, who stepped down as HP’s chief executive officer on Aug. 6 after an investigation found he filed inaccurate expense reports to conceal a personal relationship with a marketing contractor.

The offer is HP’s second bid for 3Par, Dave Donatelli, who heads HP’s storage and server division, said Monday. The PC-maker has been in talks with 3Par for “some period of time,” he said, declining to comment further.

David Frink, a Dell spokesman, declined to comment. John D’Avolio, a spokesman for 3Par, didn’t immediately comment.

HP’s offer values the unprofitable 3Par at almost 2 1/2 times its worth before Dell’s bid, and at more than eight times its sales of $194.3 million in the year ended March 31. 3Par’s revenue rose 5.2 percent from 2009, and it has about 670 employees.

“It’s a very exorbitant price,” Levington said. It probably doesn’t make economic sense for Dell to counter, he said.”

Read more here

Read Full Post »

Here is a good excerpt for Mercury News.

“One of the world’s pre-eminent venture capitalists, Michael Moritz of Sequoia Capital, has picked winners like Flextronics, Cisco Systems, Yahoo, PayPal and Google by focusing on small teams or individuals that on first glance might appear to be unfundable. In a rare interview, Moritz spoke with the Mercury News about one of his latest long-shots, a call-center company founded in India, how he picks companies to back, and the silver lining in the financial meltdown. Following is an edited transcript.

Q How has the financial crisis reshaped the economy and affected the way you pick winners?

A I think tougher circumstances just serve to shine a brighter light on everything. The manner in which we pursue the business hasn’t changed.

Q Has it affected the way you view your portfolio companies?

A I think the managements of companies all across America understand that the sooner they don’t have to rely on the kindness of strangers to support their operations, the better off they are going to be. Again, I don’t think that is a startling new insight. It’s just when money is harder to get and credit is tight and investors are less giddy, I think companies and managements become much more disciplined. It means the people who start companies in times like these are people who are genuinely interested in starting companies. You have to be very determined to venture out into atmospheric circumstances like the ones that we’ve been through in the past nine months. Which means that the pretenders and posers and people who are really much more interested, if they are honest about it, in becoming rich than starting a company — those sorts of people will stay on the sidelines and wait for the weather to improve.”

Read the full interview by Elise Ackerman at at SiliconValley.com here.

Others covering this story: Reddit, Trading markets, MATR.

Read Full Post »