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Strategies & Market Trends : Speculating in Takeover Targets -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (2373)	9/20/2010 12:23:26 PM
From: richardred	Respond to of 7175

The Next Cloud-Computing Takeovers Posted: Sep 20, 2010 10:03 AM by Matthew McCall A theme that has been sweeping the market over the last couple of months has been the resurgence of "Merger Mondays." With large amounts of cash sitting on the balance sheet of the majority of the large-cap firms it is no surprise they are putting it to work through acquisitions. When stock prices are deflated and you are the company with cash, this is the time to position for the future through mergers. (Learn more about mergers and what they mean for your portfolio in The Merger - What To Do When Companies Converge.) IN PICTURES: 20 Tools For Building Up Your Portfolio Get Free Stock Analysis By Email Cloud Mergers The technology sector has been a hotbed for mergers, but one area in particular has been a focus of a number of large and lucrative buyouts - cloud computing. 3Par (NYSE:PAR) is the most popular due to the multiple bids from tech giants Hewlett-Packard (NYSE:HPQ) and Dell (Nasdaq:DELL). The acquiree closed at $9.65 on 8/13/10 and by the first day of September the stock was trading above $32. The winner in the end was HPQ, which paid 10 times revenue for the data storage and cloud-computing firm. HPQ also made a big for Arc Sight (Nasdaq:ARST) in mid-September, a $1.5 billion deal. ARST is a provider of security and compliance management solutions that help mitigate cyber threats. (For more, see Adding Smart-Money Touches.) Merger Candidates Many believe, including myself, that the future of the internet will be focused on the cloud-computing space. If that prediction rings true, there is a good chance the merger and acquisition wave continues for the next couple of years. Below are a few of the candidates in the sector to watch. NetSuite (NYSE:N) offers applications that are focused on customer-relationship management, e-commerce and resource planning. Year-to-date the stock is up 25% and is near a 52-week high. In early August the company reported earnings per share of three cents and revenue that increased by 17%. The stock rose on the news because the company upped its full year guidance from 11 to 12 cents per share. Concur Technologies (Nasdaq:CNQR) provides on-demand spending management solutions to companies around the globe. The stock is up 19% in 2010 and is sitting at a new 11-year high. The most recent earnings report in late July beat expectations, but the company lowered future guidance, sending the stock lower in the short term. Investors have been able to shrug it off because of the prospects in the overall sector. Quest Software (Nasdaq:QSFT) makes enterprise software products that help systems operate with other vendors' platforms. The stock recently hit an eight-year high and is up 25% in 2010. The most recent earnings report showed a drop in net income by 15% as revenue increased by 13%. The news was good enough to propel the stock to new multi-year highs. Bottom Line Keep in mind that I have never and will never advocate buying an individual stock on the sole purpose of a potential takeover. If the stock meets other stringent requirements and it just happens to be a potential target, all the better. (For more, see Is Cloud Computing An Investable Trend?) stocks.investopedia.com