NEW YORK (
) -- If you discount
lackluster first days of trading, the social network's record $16 billion internet initial public offering and the listings of
show that tech is in the midst of a valuation boom not seen since the late 1990s.
Life in the technology sector is far from coming up all roses, though. Web pioneers like
, PC titans such as
(HPQ - Get Report)
, and business services giants
are trying to tweak their businesses to keep step with rapid change that's chipped away at growth prospects and share prices.
Amid a contrasting outlook for tech's hardware and software giants, and a new set of nimble and fast-growing peers, investors may want to focus on an activist investor push for a sale of
as a read on just how aggressive blue chips can be in using M&A to brace for an onslaught of competition coming from clouds, smartphones and digital startups.
|Will BMC Software be the next big tech deal?
Earlier in May, activist hedge fund and experienced tech investor
unveiled a bet on what would be the biggest U.S. software takeout since the financial crisis in pushing for a sale of
, whose market cap stands at $6.9 billion. The move is notable because, at once, Elliott Associates is making a $350 million-plus stock bet on M&A interest in the enterprise software space, while it's targeting a deal at the upper end of what may be conceivable in the sector.
At BMC's $6.9 billion market value,
calculates that an acquisition would be the eighth-largest U.S. software acquisition on record. But open-ended and large-cap M&A expectations have so far disappointed, even amid a land-grab for cloud assets.
data also shows that a deal for a U.S. listed software company of BMC's size hasn't happened since 2007. Simply put, tech giants have been reluctant to cut mega-deals, instead putting near record cash to work in many small and midsized acquisitions.
Weaker than expected first quarter earnings reports from Dell and Cisco and a pivotal year for Hewlett Packard signal that there is a limit to just how bold tech turnaround efforts can be. Still,
(SAP - Get Report)
$4.3 billion acquisition
on Tuesday shows that appetite for enterprise software and cloud-based solutions remains among cash rich IT giants.
Even after Tuesday's deal, high technology M&A is down 29% year-to-date when compared to 2011, according to
Elliott Associates 5.45% stake in BMC Software and its repeated calls for the company's management to initiate a sale process has many torn over whether it is a credible prospect. BMC's shares are up less than 10% to $42.90 since Elliott unveiled its hostile stake on May 14.