Where Tech M&A Is Headed This Year

Other corners of the tech sector are also heating up. Managed hosting/cloud services have seen some action already this year, with Verizon(VZ) recently spending $1.4 billion on Terremark(TMRK) and Time Warner Cable(TWC) grabbing NaviSite(NAVI) for $230 million.

Other candidates in this space include Internap(INAP) and Rackspace(RAX), according to Brenon Daly, senior M&A analyst at The 451 Group. "You could certainly make a defensible case for Rackspace and Internap as acquisition targets, because of their positioning," he told TheStreet. "Rackspace has a solid cloud business and Internap also has a content delivery network (CDN)."

Rackspace shares popped last year on chatter about a possible Dell merger, and Daly thinks that Web hosting firm Level 3 Communications(LVLT) would benefit from buying a CDN player such as Internap or even Limelight Networks(LLNW).

The best known of the CDNs, which provide services for delivering data over the Web, is Akamai(AKAM), although its $8.8 billion market cap would make it a pricey acquisition. Internap and Limelight Networks would be cheaper alternatives, according to Daly.

Blaylock Robert Van's Achramowicz, however, has a slightly different take. "The two companies that come to mind [for acquisition] are Akamai and Riverbed(RVBD)," he told TheStreet. "Akamai has been doing content data management for a long time."

The analyst acknowledges that Akamai would be a pricey deal, but says that the firm would still be a good purchase for the likes of IBM or HP.

Riverbed, which makes products for improving traffic across Wide Area Networks (WANs), is one of TheStreet's top networking stocks for 2011 and its technology is seen as key for companies consolidating their data centers and building cloud infrastructure.

"There has been a lot of talk about Riverbed -- they are a great company," said Achramowicz. "I think that somebody like a Dell or a HP would find them interesting, even someone like an EMC(EMC) because of their data storage focus."

--Written by James Rogers in New York.

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