Cramer's Top 10 Takeover Candidates

Palm(PALM)

This company's has big exposure to the smartphone market, and it's partnered with Microsoft(MSFT) and Vodafone(VOD) to promote the Treo in Europe. Palm is trading at just seven times EBITDA, with a $1.6 billion market cap.

Possible partners: Hewlett-Packard, Dell, private equity/LBO firms

ActiveIdentity(ACTI)

A very-poor man's RSA Security(RSAS), but we know that Symantec(SYMC) was in the bidding war for RSA, so it could be looking for a consolation prize. The stock has a $206 million market cap, but $140 million in cash with a cash burn of about $20 million a year. Its EV/sales is 1.5 times.

Possible partner: Symantec

Wind River Systems(WIND)

One of the 15 tech stocks down most so far this year (-45%) and trading at 18 times EV/EBITDA. The company offers evice software optimization solutions to enterprises that are used to optimize the functionality of digital imaging products, automobile braking systems, Internet routers, avionics control panels, and factory automation equipment.

BEA Systems(BEAS)

Tibco(TIBX)

These two software companies are the most likely software companies to get taken out next. Citigroup says there is a "middleware" gap, that's what these two companies make.

BEA trades at 3.8x sales and 14.9x EV/EBITDA. Tibco trades at 4.4x sales and 16.2x EV/EBITDA.

Their possible partners: HPQ, SAP, Oracle

Rounding out the list of 10, are:

• Websense(WBSN), one of the 15 tech stocks down the most this year (-43%)
• FileNet(FILE), another company Citigroup says will fill a content management gap
• Avid Technology(AVID), down 38% for the year.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider ActiveIdentity to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

At the time of publication, Cramer had no positions in stocks mentioned.

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