Who's Got Cash to Spend

By Reuters  |  Print this article Print

From HP buying 3Com and Palm, to Oracle buying Sun Microsystems to SAP buying Sybase, cash rich technology companies are on a shopping spree to expand into new markets as they prepare for economic recovery. Even Novell has put itself up for sale. And Brocade reportedly investigated the market for its own sale last year. Here's what's behind the trend.

Microsoft and Apple Inc (NASDAQ: AAPL), which have both made a number of small deals recently, each have more than $40 billion in cash and short-term investments on their balance sheets, if they choose to use it.

Microsoft bought nine companies for $925 million in fiscal 2009, almost all in cash, but may not be keen to relive its failed $47.5 billion attempt to take over Internet rival Yahoo (NASDAQ: YHOO) two years ago.

Google, with $26.5 billion in the bank, has been averaging almost a deal a week recently as it picks up small companies to acquire engineering talent. But it may have its hands tied on big deals until it gets regulatory approval for its proposed $750 million purchase of mobile ad firm AdMob.

IBM, with $14 billion in cash and short-term investments, spent $1.5 billion on acquisitions last year and has signaled it is poised to get more active in making deals. Chief Executive Sam Palmisano told analysts on Wednesday that he has budgeted some $20 billion for mergers and acquisitions through 2015.

Oracle Corp (NASDAQ:ORCL) CEO Larry Ellison, who has spent more than $42 billion to buy some 60 companies over the past seven years, told Reuters in a recent interview that he will continue to be aggressive, adding hardware companies to his shopping list following the purchase in January of computer maker Sun Microsystems.

In addition to software makers, his targets include makers of semiconductors, storage, servers and networking equipment.

Another serial acquirer, Cisco, has $39 billion on hand, and has made no secret of its ambitions to grow, after moving into new areas like data center servers.

"There's been a series of progressively larger deals, it says that confidence is back," said Jefferies & Co analyst Katherine Egbert. "Buyers are saying 'we want growth.' The time is ripe, so I expect more deals."

(Reporting by Bill Rigby; Additional reporting by Paritosh Bansal, Jim Finkle, Gabriel Madway, Alexei Oreskovic and Tarmo Virki; Editing by Phil Berlowitz)