Websense is a phenomenal company.  Its web, data, and email filtering technology undoubtedly saves companies endless dollars and endless technology headaches and endless wasted hours from filtering out websites, content, and data that are deemed inappropriate or which are deemed to be infiltrating that could harm a user’s computer.

What is interesting is that both Novell Inc. (NASDAQ: NOVL) and Lawson Software, Inc. (NASDAQ: LWSN) are larger and both are involved in pending mergers.  Websense is arguably the most impressive of these three companies without considering its sub-$1 billion market cap today. Though Websense seems expensive, it may be very cheap to the right buyer .  Lawson is far from cheap and Novell went almost nowhere in more than a decade, and we admit that the conservative stance may not be reflected by a true technology buyer.

The sale was initially touted as a $1 billion possibility and we would note that Websense ended 2010 with some $77.6 million in cash and with $67 million in direct long-term debt. We also cannot help but notice more than 60% of the company’s assets are classified as “goodwill and intangible assets” and Yahoo! actually classifies the net tangible assets as being -$281.86 million even if its total equity is listed as $131.66 million.

The world of data security has consolidated and it is possibly the recent McAfee acquisition by Intel Corporation (NASDAQ: INTC) which has gotten data security companies back on the M&A radar.

Hewlett-Packard Co. (NYSE: HPQ), Oracle Corporation (NASDAQ: ORCL), SAP AG (NYSE: SAP) were all listed as possible rival bidders and a potential $13 to $15 value as being possible by Mergers & Acquisitions.  Premiums to premium-buyouts are not new and this will not be the last such premium you ever see in technology M&A.

Our concern over the “premium” here is that valuations are already getting stretched for the current model.  If the company can better transition to an SaaS model over a sale and install model easier as a private company without having to worry about shareholder values daily, then our concern over value is probably a bit too conservative.

We saw the same premium take place originally in Novell, Inc. (NASDAQ: NOVL), where a merger from Attachmate Corporation and Longview Software Acquisition Corp. at $6.10 per share has been approved by shareholders but is still pending its patent sale in the U.S. and Germany. This was higher than the prior Elliott Associates buyout offer.

In just the last two days we have witnessed Lawson shares pop from about $11.50 to above $12.50 before the market uneasiness took out some wind from the sails.  Shares closed at $12.00 on Tuesday, and shares were closer to $10.00 before word of a possible sale surfaced.

JON C. OGG

So far, that’s about all anyone knows for sure about the mysterious CPTN Holdings. The most obvious question is whether or not CPTN plans to make it easier or more difficult to license the 882 patents once held by Novell.

One possible reason for the purchase could be that the four companies want to assure themselves that they hold the legal rights to components of their own technologies that they either licensed or should have licensed from Novell. Without getting into the alphabet soup of computer software development, it is probably safe to say pending lawsuits among CPTN companies and Novell will disappear, and that companies outside the consortium face some pretty formidable opposition should they be the least bit vulnerable to a patent infringement charge.

The target here has to be Google Inc. (NASDAQ: GOOG). Oracle has already filed suit against Google for infringing intellectual property related to Java that Oracle acquired with its purchase of Sun Microsystems. Google is already the main target of patent infringement suits over its Android smartphone operating system, and now that the company has released a preview version of its Chrome operating system, the target painted on its back just got bigger.

Microsoft, especially, and Apple could feel the impact of Google’s cloud-based Chrome OS. Early reviews of Chrome are lukewarm, to be sure, and many doubt that the OS will ever amount to much. But if you’re Microsoft, you can’t be too careful.

Oracle’s lawsuit against Google goes right to the heart of Android, seeking to enjoin Google from distributing the OS and destroying all copies that are already out there. On top of that, Oracle wants statutory and treble damages. Google has to fight this lawsuit, but may choose to pony up some cash if the CPTN group gets lawyered up.

At the very least, the CPTN group’s purchase will save them from potential lawsuits related to the 882 patents and it gives them the right to enforce their own rights should they choose to do so. A good guess is that they will choose to do so, and very aggressively too.

Paul Ausick

Affymax, Inc. (NASDAQ: AFFY) is up 7% to $6, relative to a 52-week range of $4.90 – $26.20.

Celldex Therapeutics, Inc. (NASDAQ: CLDX) is up 7% premarket to $4.95, relative to a 52-week range of $2.91 - $9.49. The gain comes after news of successful phase II clinincal trails of the company’s brain cancer drug.

Cirrus Logic, Inc. (NASDAQ: CRUS) is up 5% to $14.52 after being upgraded by Jefferies to “buy.”

Gold Mountain Coffee Roasters Inc. (NASDAQ: GMCR) is up 11.2% on heavy volume premarket after friday’s spike, which came as a result of announced accounting errors within the company.

Netflix, Inc. (NASDAQ: NFLX) is up $3.00 premarket after announcing a new plan which will allow users to stream programming over the internet for $7.99 a month. Shares of NFLX are at $176, relative to a 52-week range of $48.52-$184.74.

Novell, Inc. (NASDAQ: NOVL) has just announced it has agreed to be acquired by Attachmate Corporation. The stock is up $0.41 to $6.00, relative to a 52-week range of $3.84 – $6.53.

-Michael B. Sauter

Brocade Communications Systems, Inc. (NASDAQ: BRCD) rose as an M&A potential target in late-Summer and shares have held their own despite the thought that many feel a merger here would have to come at too high of a premium for a buyer.  This was one of our picks for stocks which could double earlier this year before the cloud and M&A craze came, and the buyout thesis for a low-cost provider in networking and storage was a part of that call.

The company is effectively half Brocade in storage and half Foundry in communications and networking.  Shares were at $5.15 on our first go-round, now shares trade around $5.80.  The 52-week trading range is $4.64 to $9.45 and the market cap is roughly $2.6 billion.  Brocade is not meant to be an earnings report play as shares are often volatile around earnings.  The status of a deal is currently “possible, but nothing set on the books.”  Analysts also have an average price target of $6.35 for Brocade.

Novell Inc. (NASDAQ: NOVL) has been a long road of excitement that has so far led to nowhere.  The pending merger offer and pending auction or divesting plan has been on hold for about a month now,and frankly from the start we  expected that Novell would need a higher buyout price to secure shareholder approval.   There were reports that Novell was having a hard time selling its NetWare and identity management products because private equity firms would not pay Novell’s asking price.

When the first merger offer came, shares popped to $6.08 from $4.75 on over 140 million shares in a single day in March.  Shares have traded as high as around $6.50 but the stock is back to about $6.00.  Unfortunately, that is the long road to nowhere.  One key issue is that much of Novell’s cash is tied up internationally and cannot be easily accessed in a tax-efficient manner of repatriation.  The company had been a potential buyout candidate in the minds of many investors on several occasions over the last 10 to 15 years.  Here we are, Novell is small with a $2.1 billion market cap and it is still an independent company with over $1 billion in cash and equivalents if the cash can be tapped.

Bed Bath & Beyond Inc. (NASDAQ: BBBY) is again showing how its consumers are loyal and dedicated through good times and bad times after its earnings beat.  Shares are up another 4.6% at $44.00.

Brocade Communications Systems, Inc. (NASDAQ: BRCD) is giving back some of yesterday’s buyout rumor gains.  So far we have seen a 1.75% drop to $6.15 in the pre-market.

Netflix, Inc. (NASDAQ: NFLX) is hitting a new 52-week high again (and again) after Blockbuster filed for Bankruptcy protection.  Shares closed at $156.93 and are trading up over $158.00.

Novell, Inc. (NASDAQ: NOVL) is down on word that valuations of its NetWare operations are slowing the auction process.  Shares are down over 6% and are under $6.10.

Red Hat, Inc. (NYSE: RHT) beat earnings and added subscription revenues again.   Shares are up 4.7% at $38.50 versus a $39.48 high over the last 52-weeks.

Rite Aid Corp. (NYSE: RAD) posted an even wider-than-expected and shares are down 10% at $0.99 on active volume.

Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) is lower after it priced its public offering of $375 million in convertible senior subordinated.  Shares are down almost 4% at $34.84.

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JON C. OGG

AngloGold Ashanti Ltd. (NYSE: AU) was down 4.5% at $44.62 on over 500,000 shares after a mine accident closed down a mine after a worker’s death.

Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) is down after its weight loss drug candidate is in trouble.  Shares are down 6.8% at $3.85 on over 200,000 shares.

Beazer Homes USA Inc. (NYSE: BZH) is down after saying that it might miss order expectations this quarter and cut estimates for the year on land costs.  Shares are down 4.6% at $4.33 on thin volume.

Harbor BioSciences, Inc (NASDAQ: HRBR) is soaring by 60% at $0.38 after its prostate cancer drug shows partial overall response.

Level 3 Communications Inc. (NASDAQ: LVLT) is recovering after pricing its $175 million 6.5% Convertible Senior Notes due 2016 with an initial conversion price of $1.235 per share.  Shares were hit yesterday but the stock is up 4.25 at $0.99 on recovery mode after an obvious Over-Sale yesterday.

Neurocrine Biosciences, Inc. (NASDAQ: NBIX) is down after its major depressive disorder drug candidate was ineffective.  Shares were down by 9.6% at $5.65 on more than 300,000 shares last night and shares are trading around $5.67 on last look this morning.

Novell, Inc. (NASDAQ: NOVL) is up on word that it may sell the company in two parts; sshares are up 6% around $5.90 on close to 1 million shares.

Savient Pharmaceuticals Inc. (NASDAQ: SVNT) is soaring after the FDA finally approvedits gout drug, about a year or two later than many expected.  Shares are up 27% at $18.81 on more than 1 million shares.

UTStarcom, Inc. (NASDAQ: UTSI) is up 7.25% at $2.07 after the company announced a contract from Jinan, Shandong Province to accelerate its network transformation and integration.

Radware Ltd. (NASDAQ: RDWR) was yesterday’s big rumor move higher but shares are down slightly this morning.

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

In addition to The Unusual Suspects, we have several key issues to consider.  On Friday, there were many large cap stocks hitting 52-week lows and many of these looked and felt counter-intuitive on the surface.  There were also billions of dollars in new share buyback plans announced this last week on top of many buyback updates and expansions.

Apollo Group Inc. (NASDAQ: APOL) has been battered along with all for-profit education stocks due to reimbursement rate, recruiting tactics, post-graduate expectation reality checks, student loan default rates and more.  Apollo has also experienced SEC issues.  Despite an Asensio report slamming it Friday, Apollo actually closed up on a down day Friday and the company appears to have passed the criteria set in the initial regulatory tests.  This was one of the 5 options trades in the sector we wrote about for Investorplace.com as outlier bets for potential exponential returns (low premiums for out of the money calls) if the regulatory pressure eases even a fraction that could lead to an upside surge in share prices.

AU Optronics Corp (NYSE: AUO) is getting press it does not want.  The Taiwanese maker of thin film LCDs had its CEO indicted over price fixing in June, but this last week CEO Lai-Juh Chen was ordered to surrender his passport this week so he cannot leave the country.  At $9.02, the ADRs 52-week trading range is $8.68 to $13.30.

Barnes & Noble, Inc. (NYSE: BKS) reports earnings this coming Tuesday.  Shares were at $12.84 before it put itself up for sale, and they popped to $15.31 the next day in early August.  The high was $16.74 since then but shares closed at $15.53 on Friday. A proxy situation and earnings will make the sale process a key focus here this coming week.  With a $914 million market cap and a 52-week trading range of $11.89 to $25.07, the big question comes down to what it can fetch or if it can fetch a bid.  RadioShack ran into troubles in selling its brick and mortar retail system, so the question is if a book brick and mortar player can compete against Amazon and Apple in the future.

BHP Billiton plc (NYSE: BHP) reports earnings on Wednesday.  The company’s offer for Potash Corp. of Saskatchewan (NYSE: POT) is what everyone will be focusing on.  The belief by many is that the now hostile tender will need to to $160 per share or higher.  The CEO’s payday will be one of the larger paydays in history if this occurs.  Investors will be looking very closely for the merger details and US investors are unlikely to pay attention to BHP’s actual earnings report.

BP plc (NYSE: BP) may have been out of the spotlight over the last three weeks now that its top-kill well blockage seems to have worked.  This coming Wednesday it may be in the news again as the President’s commission on the BP oil spill meets.  At $36.40, BP shares are down over 10% from the highs after recovery.

Cumberland Pharmaceuticals Inc. (NASDAQ: CPIX) saw shares fall 8.8% in the after-hours session down to $5.49 on over 60,000 shares in the after-hours session.  This one fell because it disclosed that the FDA is extending the review period by three months of its liver drug candidate called Acetadote.  Average volume is only about 100,000 shares and the market cap was a mere $123 million.  The prior 52-week trading range was $5.51 to $17.24, so if this holds it will mark a new 52-week low.

Fiserv, Inc. (NASDAQ: FISV) is one to watch ahead as this was the newest common stock addition from Berkshire Hathaway and Warren Buffett in the stock portfolio. Buffett bought a new position of 4.4 million shares of common stock during the second quarter and shares closed up over 3% week over week.  This one has now moved on to more investor radars and volume was lighter than you might have expected due to this being the slow days of August.  Berkshire’s full holdings are here.

Genzyme Corporation (NASDAQ: GENZ) may be running out of time or shareholder patience.  This Sanofi-Aventis offer has remained on the table with what is effectively nothing but silence.  Henri Termeer may be running short on investor patience here, even if this is obvious stalling to see if competing bids will come.  The due diligence here is the big risk he is taking.  If a company decides that Genzyme has continuing manufacturing woes and if Sanofi gets impatient, Genzyme could be reminded that there is a 15% hot-air premium in the shares.  Reuters says the silence may indicate talks are taking place.  Investors better hope that stance is right.

Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ) got crushed on Friday after the close.  It failed to win an FDA advisory panel backing for its fibromyalgia drug candidate.  Shares fell 28% to $7.05 versus a 52-week trading range of $6.01 to $13.95.  This one traded over 1 million shares in the after-hours on Friday so it will be very active on Monday.

Netflix Inc. (NASDAQ: NFLX) was listed as the #1 pole position chart in IBD this weekend, for the second week in a row. The week before saw a 12% gain but the stock actually closed down this last week.  Shares closed at $129.96 versus $132.26 the Friday before and versus a high print this last week of $140.90.  We don’t really agree that this represents solid strength, although the market weakness was a part and IBD has a history of years and years here.

Novell Inc. (NASDAQ: NOVL) has earnings on deck this coming Thursday and it recently trimmed its third quarter revenue range to $197 to $199 million versus prior guidance of $205 to $210 million. The company said its guidance reflects what it believes is customer uncertainty associated with Novell’s ongoing review of various alternatives to enhance stockholder value.  In short, that new hoped-for alternative buyout has not materially come about.  We predicted in May that the $5.75 buyout might need to be closer to $7.00 to secure the deal.  Shares are still at $5.81 and the 52-week trading range is $3.84 to $6.36.  One to watch for sure.

Symantec Corp. (NASDAQ: SYMC) is an ongoing stock to watch after the Intel-McAfee merger this week.  Symantec was in deep $%^& before the merger after it warned.  It just can’t ever get its act together.  Now there is a dual risk and opportunity ahead.  If Intel can convince PC makers that the McAfee bundle into hardware and into software is better than software alone, the Symantec could find its Norton anti-virus business getting ripped apart.  If Symantec can convince PC makers and device makers that it is now more important than ever to double-up on security providers then it has a huge opportunity.  The company’s history sort of, well it stinks.  This week’s gain was almost 12% to $13.80, which is the highest close since its $14.67 close before earnings and its earnings warning in late-July.

Tyco International Ltd. (NYSE: TYC) went through its big breakup in June of 2007, but Standard & Poor’s endorsed it all over again.  S&P is readmitting Tyco back into the S&P 500 Index.  Shares closed up 5.3% at $38.70 on more than triple-normal trading volume with more than 19.9 million shares trading hands.  The date it will be added is after the close on August 26 and we expect heavy trading volume to continue as indexers have to add in shares.  There are still millions of shares that need to be purchased going into the S&P 500 Index addition.

Vermillion, Inc. (NASDAQ: VRML) was a top active trader alert we asked “How long can a trend last?” because there had been 13 straight days of losses and was at $11.80 when the mudslide started.  It closed up 1.7% at $6.03 on Friday.  If this trend continues, Vermillion will have to change names to “Vermin.”  One day is no victory, but that is a concerning chart that should attract both bears and bargain hunters ahead.  Volume is still very low, but this is a new battleground stock that we won’t assign any upside or downside targets to.

VocalTec Communications, Inc. (NASDAQ: CALL) has been on fire and we want to revisit this one since our first alert one month ago.  When we saw that VocalTec merged with the owner of MagicJack, we could not help but to recognize the potential here even though it went through a reverse stock split.  That jumped to roughly $15.00 on the closure of the merger and it has steadily climbed higher and higher.  Shares closed at $38.00, which is close to 150% appreciation.  It keeps rallying because the CEO has been given permission to increase ownership to over 25% and there is even a share buyback of $12 million.  The company’s own investor relations site links to NASDAQ, which now says that the market cap of the combined companies after the share issuance is $445.9 million based on 11.736 million shares.  This one now trades at a multiple of revenue guidance rather than a discount to revenue guidance.  We can’t call for a short sale but those who are sitting on big gains should at least consider taking the cost basis out of the trade here so that you can still have upside and you leave assured returns in the name.

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Some names under consideration that have either been rumored to be in deals or which could potentially be in future M&A deals are Brocade Communications Systems, Inc. (NASDAQ: BRCD), Cincinnati Bell Inc. (NYSE: CBB), CommVault Systems, Inc. (NASDAQ: CVLT), Dell Inc. (NASDAQ: DELL), JDS Uniphase Corporation (NASDAQ: JDSU), Leap Wireless International Inc. (NASDAQ: LEAP), MetroPCS Communications Inc. (NYSE: PCS), MEMC Electronic Materials Inc. (NYSE: WFR), Novell Inc. (NASDAQ: NOVL), Premiere Global Services, Inc. (NYSE: PGI), RadioShack Corp. (NYSE: RSH), Tellabs Inc. (NASDAQ: TLAB), Teradata Corporation (NYSE: TDC), OmniVision Technologies Inc. (NASDAQ: OVTI), and Synaptics Inc. (NASDAQ: SYNA).

For starters, most of the companies listed as targets here are possible bolt-on mergers rather than super-mergers.  Closing a mega-deal by the end of the year that has not been announced is going to be tough, and that likely means that the capital gains and the effects of the old Bush tax rates on capital gains will be either gone or muted in 2011.  Businesses today are willing to spend cash for companies that can be easily integrated or that open up new and untapped markets for them.  As far as a giant taking on another giant and then having to make divestitures and many layoffs, those deals are far less attractive for companies right now.  Then there is the notion of a tougher regulatory approval environment for large mergers that has to be considered.

The list of companies we have provided falls into at least two of three distinct categories.  The first category is that the company has been either a target or acquirer and a deal fell through.  The second category is that the company has either been rumored to be in a merger or it is a company that is one we have viewed as a shoe-in target for the right acquirer.  Lastly, there is the bolt-on deal or at a minimum a tool-box deal to make these easy for a buyer to gobble up.

We have compiled a list of predators and prey here for your review in the technology, telecom, and communications sectors.  This list is displayed alphabetically to avoid any ranking issues or any more pointed issues over size and the real chances of a deal coming into play.

One name which used to come up routinely is Brocade Communications Systems, Inc. (NASDAQ: BRCD).  This was one of our picks for stocks which could still double, and the buyout thesis for a low-cost provider in networking and storage was a part of why we thought the stock could double.  The short-term moves are not working in favor of holders, so it would seem no deal is imminent even if shares are at $5.15.

Cincinnati Bell Inc. (NYSE: CBB) is one of the last of the “anything remotely tied to the Bells” stocks, although it has always been its own boss.  It is the main telecom player for Cincinnati and its nearby areas located in Ohio, Indiana and Kentucky, making this a potential bolt-on acquisition for a larger telecom player.  It has almost the same exact operational area as its license back to the end of the 1800′s with a 25 mile radius around Cincinnati.  The small $615 million market cap would make this a line-item for a buyer, but it is worth noting that both AT&T and Verizon are going to have a harder and harder time under regulatory review in making acquisitions.  With shares at $3.06, the 52-week trading range is $2.50 to $3.74.

CommVault Systems, Inc. (NASDAQ: CVLT) is on sale due to its disappointing guidance this week.  The 21% drop to $18.50 would not likely make any lower-premium buyout more likely to be approved as the 52-week range is $15.60 to $24.51.  That recent high is an all-time high though and a Goldman Sachs strategist had this as a potential buyout candidate earlier this year.  Its Simpana platform aims to help enterprises manage data growth while cutting costs and adding security via cloud integration, deduplication, recovery, efficiency, virtualization, remote and branch office integration, and more.  Valuations are an issue, although the 21% drop leaves a market cap at just about $800 million.

24/7 Wall St. will look at the Twitter posts at Reuters Biz, WSJ, Financial Times, CNN Money, MarketWatch, CNBC, and 24/7 Wall St. each day to see which stocks are most frequently mentioned. It is clear that in this area of social media these tweet are a sign of which companies the Twitter universe is interested in. These financial sites are followed by a combined 625,000 Twitter users which makes them a sizeable sample of Wall St.’s interests. In some cases, we will publish the actual tweets from the sites.

Among the daily top trending  symbols on stock twitter aggregator StockTwits are Google Inc (NASDAQ: GOOG), Chipotle Mexican Grill, Inc (NYSE: CMG), Rambus, Inc. (NASDAQ: RMBS), True Religion Apparel, Inc. (NASDAQ: TRLG), Family Dollar Stores, Inc. (NYSE: FDO), Cliffs Natural Resources, Inc. (NYSE: CLF), VMWare, Inc (NYSE: VMW), and Novell Inc (NASDAQ: NOVL).CNN Money: Oil sputters in choppy trading http://bit.ly/do0xs0

Reuters Biz: IBM to buy Sterling Commerce from ATT for $1.4 billion http://link.reuters.com/tej95k

Reuters Biz: Bank of Spain takes control of savings bank CajaSur http://link.reuters.com/vej95k

MarketWatch: Commentary: BP’s Hayward is haywired on spill, er, leak http://bit.ly/dvk6Cn

FT: Berlin prepares for €10bn yearly cuts: The German government is to begin a drastic budget austerity programme next… http://bit.ly/a24x1k

FT: Anger at White House over oil spill role: The Obama administration faces mounting criticism against its handling o… http://bit.ly/b80fRk

Douglas A. McIntyre