This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Honey, I Shrunk the Tech Sector: M&A Alters the Game

Stocks in this article: CSCO

Back in the good old days, there was a degree of certainty about the tech sector. Companies like Cisco (CSCO) and Hewlett-Packard (HPQ) could partner knowing that one essentially touted networking gear and the other sold servers and software. The Google (GOOG) CEO could even sit on the board of Apple (HPQ) with barely a raised eyebrow . Not any more, though.

The recession has been the catalyst for a major tech shake-up, turning long-standing buddies into enemies and prompting acquisitions that would have been greeted with incredulity just a couple of years ago. Whether Cisco's entry into the server market, or Oracle's (ORCL) surprise acquisition of Sun Microsystems (JAVA), the tech market is undergoing a rapid transformation. The big question is -- who will be the winners and losers?

"There have been a few big tectonic shifts that have happened," Ron Gruia, an analyst at Frost & Sullivan told "When Cisco announced their UCS (Unified Computing System), that was the first one of the big moves that have happened."

Small Cap Tech Plays

With IT budgets tightening and companies becoming ever more global, tech executives are looking to reduce the number of suppliers they deal with. As a result, tech companies are on an M&A and partnership tear.

"There's going to be more of that because there's still the drive for single-source IT buying in CIO offices," said Martin Tobias, a partner at Bellevue, Wash.-based venture capital firm Ignition Partners. "The more things they can buy from one company, the happier they are."

Among the recent notable tech-deal news:

  • Oracle bought Sun Microsystems
  • IBM bought SPSS
  • EMC bought Data Domain
  • Radware bought Nortel's Alteon switch business
  • Rackable Bought Silicon Graphics
  • Broadcom attempted, unsuccessfully, to buy Emulex
  • Speculation has linked NetApp with more M&A
  • Dell is reportedly planning a "significant acquisition" possibly in storage or services
  • Tech Talks Tough

    As for the sector's winner and losers, the VC feels that it will all come down to execution, rather than the nuts and bolts of technology.

    1 of 2

    Select the service that is right for you!

    Action Alerts PLUS
    Try it NOW

    Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

    Product Features:
    • $2.5+ million portfolio
    • Large-cap and dividend focus
    • Intraday trade alerts from Cramer
    • Weekly roundups
    TheStreet Quant Ratings
    Try it NOW
    Only $49.95/yr

    Access the tool that DOMINATES the Russell 2000 and the S&P 500.

    Product Features:
    • Buy, hold, or sell recommendations for over 4,300 stocks
    • Unlimited research reports on your favorite stocks
    • A custom stock screener
    • Upgrade/downgrade alerts
    Stocks Under $10
    Try it NOW

    David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

    Product Features:
    • Model portfolio
    • Stocks trading below $10
    • Intraday trade alerts
    • Weekly roundups
    Dividend Stock Advisor
    Try it NOW

    Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

    Product Features:
    • Diversified model portfolio of dividend stocks
    • Alerts when market news affect the portfolio
    • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
    Real Money Pro
    Try it NOW

    All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

    Product Features:
    • Real Money + Doug Kass Plus 15 more Wall Street Pros
    • Intraday commentary & news
    • Ultra-actionable trading ideas
    Options Profits
    Try it NOW

    Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

    Product Features:
    • 100+ monthly options trading ideas
    • Actionable options commentary & news
    • Real-time trading community
    • Options TV
    To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
    Submit an article to us!


    DOW 18,030.21 +6.04 0.03%
    S&P 500 2,081.88 -0.29 -0.01%
    NASDAQ 4,773.4720 +8.0480 0.17%

    Brokerage Partners

    Rates from

    • Mortgage
    • Credit Cards
    • Auto

    Free Newsletters from TheStreet

    My Subscriptions:

    After the Bell

    Before the Bell

    Booyah! Newsletter

    Midday Bell

    TheStreet Top 10 Stories

    Winners & Losers

    Register for Newsletters
    Top Rated Stocks Top Rated Funds Top Rated ETFs