Investing

Market Recovery: The Return of M&A in Tech and Telecom (ADCT, TEL, HPQ, ORCL, CIEN, Q, CTL, BRCD, CBB, CVLT, DELL, JDSU, LEAP, PCS, WFR, NOVL, PGI, RSH, TLAB, TDC, OVTI, SYNA)

As far as whether or not Dell Inc. (NASDAQ: DELL) can really go private, we have severe doubts about this that have not changed since Michael Dell hinted at the past thought.  PC companies are trying more and more to move to IT consulting and services, which only shows how the PC business has become no different from selling TVs, Radios, refrigerators, and toasters.  Taking Dell private would require an explosion of available capital in the private equity world that just does not seem possible.  The more likely scenario is the Dell keeps buying IT-services and peripheral operations that get it farther and farther away from being thought of as just being a PC-seller.

JDS Uniphase Corporation (NASDAQ: JDSU) was last rumored, or last ‘newly rumored,’ as an acquisition target in late-2009. With shares up at $10.75, its $2.35 billion market cap is still only a fraction of its former glory days during the dark fiber bubble in 2000.  As far as who that buyer would be, at what price a deal would have to even come at, and a few dozen other mysteries about any would-be deal here… we’ll steer far clear of trying to peg or isolate any odds on this one.  This company may just as easily, or maybe even more easily, be a potential acquirer of a smaller company if that opportunity arises.

Leap Wireless International Inc. (NASDAQ: LEAP) and MetroPCS Communications Inc. (NYSE: PCS) tried to tie the knot before, but the deal then yielded almost no takers and infighting came from it.  Share prices were much higher then, so a new deal is likely to face some of the same scrutiny.  The issue is that the overlaps here would allow for significant cost synergies and the merged company combining the #1 and #2 no-contract cellular carriers would be far more competitive against the pre-paid or no-contract sales of Sprint, AT&T, and others.  A merger here needs to be all-stock to allow upside for the long and wrong holders of each.  This would be a merger of need rather than a merger of greed.

MEMC Electronic Materials Inc. (NYSE: WFR) is another name which has come up as a would-be takeover target.  The problem is identifying it as a material takeover target for the solar sector or for the memory chip sector because of the silicon wafers.  This one also felt each time a rumor came out that it was a price-motivated bump as this one fell from north of $80 down to $10… At $10.65, almost half of its 523-week high of $20.93 might make this more than questionable.  It has also recently made a small acquisition of its own.

Novell Inc. (NASDAQ: NOVL) is one we have been surprised about how quiet the situation is in the quest for a higher price.  The proposed buyout almost steals the company when you consider its restricted or overseas cash.  Shares are at $6.15, well above the original Elliott offer of $5.75 per share in cash.  The deal on the table is not likely to be approved by holders, but a rival bid at a higher price might.

Premiere Global Services, Inc. (NYSE: PGI) is a company that would make an easy bolt-on acquisition for any of the larger communications and behind-the-scenes IT players out there.  Much of the business is mistakenly considered legacy communications when that is not the case any longer.  The robust conferencing solutions and enterprise collaboration operations here and the SaaS operations are met equally with dirt-cheap valuations on forward earnings estimates and cash flow expectations.  That makes this a potential stealth M&A target that has been largely ignored and overlooked.  With shares at $6.65 the stock is down over 30% since the peak before end of April slide.  The $400 million market cap would make this a simple integrate for just about any large company out there in the space.