NEW YORK (TheStreet) -- With a swell of interest in cloud-based computing firms, including a potential bidding war over Salesforce (CRM - Get Report), several tech companies are ideally positioned for takeovers as larger companies vie to fill service gaps.
"The [Salesforce] stock is telling you there's a deal to be had," said Stephens technology analyst Alex Zukin, who named Microsoft (MSFT - Get Report), Oracle (ORCL - Get Report) and Amazon (AMZN - Get Report) (one he characterized as a "dark horse") as likely suitors, saying he believes a deal is imminent. "I'm thinking it's going to be a bidding war."
ServiceNow (NOW - Get Report), Netsuite (N) and Marketo (MKTO) could also fill crucial cloud-services needs in larger firms and would be ideal takeover targets for any company that does not land Salesforce, Zukin said.
San Francisco-based Salesforce is reportedly the target of increasing interest for a buyout and is working with financial advisors to help it sift through offers, according to a Bloomberg report late Wednesday.
"If Oracle doesn't get Salesforce, in my mind they have to turn around and buy Netsuite or ServiceNow," Zukin said in a phone interview. "With Salesforce going away depending on who buys it, Marketo's competitive environment improves dramatically. If Salesforce gets sold, that [other] money has to go somewhere. ... You get a number of dynamics that are very positive for the sector."
With M&A heating up, particularly in the IT services area, the growing cloud space is a prime target.
Last year, U.S. mergers and acquisition deals totaled about $3.5 trillion, a 47% increase from 2013 and close to the all-time high hit set in 2007, according to Thomson Reuters data. About 11% of mergers were in the technology industry.
The value of the 37 deals in IT services in the U.S., while up only slightly from 34 deals in 2013, nearly doubled in value to $15.7 billion from $7.9 billion, according to PricewaterhouseCoopers data.
"Cloud computing is still in a relatively early phase of deployment and will likely outpace traditional IT spending for the next several years," said Tom Erginsoy, primary author of PricewaterhouseCooper's 2014 U.S. Technology Deals Insights report.
"Demand for greater mobile access, as well as greater integration and collaboration capabilities are also driving the call for greater enterprise cloud adoption," he added.
ServiceNow, a Santa Clara, Calif.,-based company with a market cap of about $11.5 billion, would offer a larger firm its cloud-based services that automate and manage IT service relationships. Shares rallied sharply late in Wednesday's session, with the stock up 12.7% year-to-date, although they slipped nearly 2% Thursday along with declines in the broader tech sector.
If it loses out on Salesforce, Oracle may look at ServiceNow because its service offerings have little to no overlap with its current product offerings, but does have the "large synergies with go-to-market strategy geared toward the CIO" that Oracle wants, Zukin said in an April 30 note.
And NetSuite, a San Mateo, Calif.-based company that provides services like applications, including financial management, customer relationship management, ecommerce and retail management, would also attract companies like Oracle. It's market cap is $7.4 billion. Shares are down 12% year-to-date but up 24.3% in the past year, having rallied about 6% late Wednesday on back of the Bloomberg story.
"NetSuite would bolster Oracle's cloud ERP capabilities," Zukin said, pointing out that former Oracle CEO Larry Ellison already holds 50% of NetSuite. NetSuite recently bought Bronto Software, an email marketing company, for about $200 million.
NetSuite reported first quarter results April 23 that beat the Street view, including non-GAAP net income of $9.0 million, or 11 cents a share, up from $4.4 million, or 6 cents per shares a year prior and above the Capital IQ consensus of 5 cents per share.
Finally, Marketo, a San-Mateo, Calif.-based company, rallied about 2% late Wednesday, holding gains steady Thursday. With a market cap of $1.7 billion, Marketo provides cloud-based marketing platforms with about 3,790 business customers in various industries.
Marketo reported mixed first-quarter results April 23, including non-GAAP net loss per diluted share of 20 cents, missing the analyst mean estimate of 21 cents a share and posting revenue of $46 million, up 42% from a year prior and above the Street view of $45.2 million.
"Salesforce's marketing cloud is perceived to be a major competitive threat and [Marketo] would benefit from acquisition disruptions at Salesforce," Zukin said.