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Jun 07
2010

Tech M&A could yield surprise result

Posted by dbedell in TechnologySAPOraclemergers and acquisitionsHPDealsbiztech

dbedell

M&A activity is booming in the corporate IT industry, as a raft of deals have been announced by hardware, software and service suppliers of corporate technology solutions. This could be a boon for companies down the road, as big vendors buy up technology to build out their infrastructure and move closer to IT solution convergence.

IBM CEO Sam Palmisano said in late May that the company plans to spend $20 billion on acquisitions over the next four years, and started things off by announcing the $1.4 billion acquisition of Sterling Commerce from AT&T. The hardware giant had already picked up data integration specialist Cast Iron Systems earlier in the month. And HP recently announced plans to take over networking hardware vendor 3Com and IT services firm EDS.

Outside the hardware space, there were also a number of buys announced over the past few weeks. Oracle, for example, has been on an acquisition bender since its completed purchase of Sun Microsystems earlier this year. Most recently, it picked up an intellectual property portfolio from marketing automation vendor Market2Lead, a prepaid telecoms billing system from Australian firm eServGlobal, and bought database firewall designer Secerno—all announced over a couple of weeks in May.

Also in the ERP space, some tech analysts have queried whether ERP vendor Lawson Software might be put up for sale soon. However, should one of the big ERP vendors pick it up—such as Oracle, JD Edwards or SAP—it would further reduce corporate options for enterprise resource planning systems.

Meanwhile SAP is facing some roadblocks in its plan to acquire Sybase. Sybase shareholder Stephen Alberti has launched a suit to block the acquisition, stating that the $5.8 billion price tag is too low. Following on from that, law firm Finkelstein Thompson released a statement saying that it is investigating possible claims for shareholders in the business intelligence vendor--saying that clauses in the merger agreement prevent the Sybase Board from discussing or looking for enhanced bids.

In an interview with the FT on Wednesday, HP CEO Mark Hurd said the current round of acquisitions is changing the corporate IT landscape by putting firms that once counted on close partnerships into direct competition, as big firms make acquisitions to fill in their service and infrastructure gaps—rather than relying on partners in the market to provide complementary solutions.

This should mean better IT pricing for companies down the road, but it also means fewer vendor choices. Although larger firms continuously tout their ability to tailor solutions, some companies prefer to be involved from early stages as a tech vendor grows to ensure they get input into functionality development. This may make it more difficult for companies to have that opportunity. 

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