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With market meltdown, which tech firms become predator or prey?

With market meltdown, which tech firms become predator or prey?

Smart companies will hunt for good merger and acquisition opportunities with stocks at multi-year lows. Here are the ones to watch.

VMware | Symbol: VMW | Stock Price: US$21.03 | Off 52-week high: 83 percent | P/E ratio: 34.6 | Market cap: US$8.2B | Cash and short-term investments: US$1.5B | Cash/market cap: 18 percent

Another high-flier that has fallen steeply this year, VMware, will start to see revenues and earnings put under pressure with Microsoft hot on its heels, investors believe. Microsoft has begun earnestly pushing its cheaper-and-good-enough competing Hyper-V virtualization technology, introduced in June.

Salesforce.com | Symbol: CRM | Stock Price: US$32.56 | Off 52-week high: 57 percent | P/E ratio: 121 | Market cap: US$3.9B | Cash and short-term investments: US$580M | Cash/market cap: 15 percent

Like VMware, Salesforce.com enjoyed a lofty stock valuation based on it being the market leader in a small-but-growing space, Software-as-a-Service. Though its stock price has been sliced nearly in half, the company still trades at a P/E ratio of 121. That could put off some buyers. So might its relatively small cash reserve of US$580 million. It too faces competition from Microsoft, and even Google.

Predators

Microsoft | Symbol: MSFT | Market cap: US$204B | Cash and short-term investments: US$23.7B

Microsoft is nicknamed "the Borg" for more than just its might in the market. Redmond also likes to buy and assimilate firms, both startups to get their technology and big firms to acquire market share. The latter was the reason why Microsoft almost spent US$48 billion to get Yahoo!. Having shown its willingness to spend that much money, anything in the low billion-dollar range must seem like a bargain.

Oracle | Symbol: ORCL | Market cap: US$84B | Cash and short-term investments: US$13B

In the past 3 1/2 years, Oracle has spent at least US$32 billion on acquisitions, turning itself into the vendor of a top-to-bottom enterprise software stack that is arguably broader in scope than any rival suite.

Yet Ellison hinted strongly on Friday that he wasn't done. "Acquisitions that we have been looking at for some time may now be more attractive," he told shareholders. But he said Oracle was now more interested in smaller, fast-growing startups rather than large public companies.


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