Thursday, November 10, 2005

A week for rumors

This was a week for tech buyout rumors, some sensible, but mostly the ignorable kind.

Here are the ones worth commenting on :

BEA - IBM was cited as the potential buyer. My verdict - unlikely. BEA is better off by itself, and as I have said before, BEA's recent buyout spree has been very smart, and that will naturally lead to a significant increase in shareholder value, which ofcourse will mean Oracle, who I expect to eventually buy BEA, will be paying a lot down the road.

Borland - Tod Nielsen's move to Borland has resulted in speculation that Oracle or BEA may end up buying Borland. I think both are real possibilities, but in either case the buyout will result in Borland's products getting retired down the road. From a buyer's perspective, BEA will have the most to gain, as it inherits a loyal userbase.

Mercury Interactive - Since the con job, i.e stock option grants, at Mercury Interactive has become public knowledge, the stock has taken a dive, making this one-time Wall Street darling extremely attractive. The rumors surrounding Mercury are the most believable. IBM, Computer Associates and HP, all make for serious buyers. The most important questions that no one seems to be asking though are a) How could have the illegalities in grants gone unnoticed for so long ? Were all the board members in deep slumber ? We need to see a few people behind bars here - any other settlement is not just. b) How widespread is this practice in the tech sector ? My guess is really widespread - one huge fraud perpetrated on shareholders, while board members sleep or willingly collude and fund managers play golf or play with other people's money, never bothering to ask real/serious questions. What a shame!


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