Technology

4 Well-Known Tech Networking Stocks Could Be Buyout Candidates

Lee Jackson

Published: March 17, 2016 9:35 am

Last Updated: January 13, 2020 11:50 am

It happens every year, and 2016 won’t be any different. Larger companies looking to add to growth in addition to that of the organic or internal variety scan the field for purchases and acquisitions that are easy to bolt on and could add returns in a timely fashion. This year the process may even speed up some as the market sell-off that happened through the first two months may have already put some companies in the sights of acquirers, despite the recent market rally.

In what is a yearly and very all-encompassing report, the analysts at RBC again go through every sector looking for possible buyout candidates. Last year the company’s takeover screens yielded 29 candidates that were eventually acquired over the following 12 months.

One screen that should be of interest to many investors is the potential takeout candidates in the tech communication and networking sector. With demand for storage, streaming and data capability huge, and continuing to grow, major companies may be looking to add some of these top companies.

We found four that are very well known.

Brocade Communications

This stock has been a perennial takeover candidate for years. Brocade Communications Systems Inc. (NASDAQ: BRCD) provides storage area networking (SAN) and Internet protocol (IP) networking solutions for businesses and organizations worldwide. It operates through three segments: SAN Products, IP Networking Products and Global Services.

Brocade spent $144.5 million buying back its stock and ended the fiscal first quarter with a solid cash-to-debt ratio ($1.39 billion in cash and $798 million in debt), meaning there’s more than enough cash left on the balance sheet to fuel more buybacks despite operating expenses climbing 7% during the quarter.

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RBC Sees 4 Technology Buyout Candidates