Where Tech M&A Is Headed This Year

NEW YORK. (TheStreet) -- Software, cloud services and networking ... Let the tech M&A activity heat up.

"This year is critical because the market is so high and so many of the stock prices are at very lofty levels," Joel Achramowicz, senior vice president of research at investment bank Blaylock Robert Van, told TheStreet. "It's a good time to be using equity for transactions."

Storage ranked high on the M&A list last year, marked by Hewlett-Packard's (HPQ) tussle with Dell (DELL) for 3Par, EMC's (EMC) $2.2 billion acquisition of Isilon, and Dell's Compellent deal, although software looks set to be a big trend in 2011.

"I expect software to continue to be a big driver of consolidation across the industry," said Charles King, principal analyst at research firm Pund-IT. "Despite its success, HP has some notable holes in its software/middleware portfolio (pointing to a singular blind spot of former CEO Mark Hurd, and one which I expect new CEO Leo Apotheker was hired to correct), so I expect the company to be an active player. "

"We believe M&A activity will shift from storage to data center management software and networking in 2011," said Jayson Noland, an analyst at Robert W.Baird, in a recent note. Possible software targets include network management firm Solar Winds (SWI), email marketing specialist Constant Contact (CTCT) and customer relationship management (CRM) outfit Right Now (RNOW), according to the analyst firm.

Robert W.Baird believes that Solar Winds would be a good fit for IBM, HP, or CA Technologies (CA) , while Intel (INTC) could be a possible suitor for Constant Contract, along with Paychex (PAYX).

Right Now would sit nicely with Adobe (ADBE) or Oracle (ORCL), it said.

In the hardware market Robert W.Baird sees security firm Fortinet (FTNT) as a likely target, continuing the M&A buzz around the company. Fortinet, which competes with Cisco (CSCO), Check Point Software Technologies (CHKP) and McAfee (MFE), pushes its FortiGate appliance as a sort of Swiss Army knife for network security: it combines firewall, antivirus, VPN and intrusion prevention systems.

With cyber threats increasing, Fortinet has already been touted as a potential target for HP, IBM, Dell and Oracle. Boosted by strong results, however, the company's stock has risen more than 148% in the last 12 months, although its $2.87 billion market cap is still well within the reach of tech's biggest hitters.

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