Tech M&A Will Increase: Evercore Partners Exec
By: Technology companies are flush with cash, which will fuel more mergers and acquisitions, Michael Price, senior managing partner for Evercore Partners, told CNBC's "The Strategy Session," on Friday.
Price said, "We are absolutely seeing a continuation of the confidence and the continuation of investment" within the tech sector.
In addition, Price said, "if you take the top 15 tech companies there are $300 billion dollars of cash on the balance sheets," he said.
There are approximately ten companies (referred to as stack companies) that have $50 billion-plus in market cap. These massive "distribution forces," as Price called them, including Microsoft, IBM, Cisco, Dell, HP, EMC, Oracle, SAP, are a challenge to the smaller companies who are trying to survive, Price said.
"As IT growth slows, the leading incumbents are consolidating positions in existing core profit pools and using this leverage to move adjacencies for growth," Price added.
Take the highly contested bid for 3Par this past summer, which ultimately went to Hewlett-Packard. This transaction was driven by the company's cloud-based storage applications.
Cloud-based storage applications enable IT organizations to deliver software and hardware as a service, offering storage infrastructure platform for highly-virtualized data centers and cloud computing.
| Price | Change | %Change | ||
|---|---|---|---|---|
| VOW3 | --- | |||
| CSCO | --- | |||
| DELL | --- | |||
| EMC | --- | |||
| GOOG | --- | |||
| HPQ | --- | |||
| IBM | --- | |||
| MSFT | --- | |||
| ORCL | --- | |||
| SAP | --- |
Lastly, there are the game-changers such as Google and Apple who are changing the stack competitor paradigm. For example, Price said, "as Microsoft sells package application software, Google sells it online. And then there's Apple, which is revolutionizing IT."