Merger & Acquisition by top Technology companies


Published on

The study looks into the merger and acquisition by the top 10 Enterprise Technology companies in between 2000 to 2011 and attempts to identify the trend and strategic direction for these companies.

Published in: Business, Technology
  • Be the first to comment

Merger & Acquisition by top Technology companies

  1. 1. Merger & Acquisitions by Big IT CompaniesA study to identify the trend and strategyProf. R. Srinivasan (CSP)Naveen Kumar K E (2008040)Satyajit Paul (2008046)Date – 19-Mar-2011PGSEM Final Year Project
  2. 2. Project OverviewUnderstanding the strategies of the large Tech Companies byanalyzing their acquisitions. Our study should help us develop an indepth understanding about the emerging technology trends &innovation and how those technology trends & innovationinfluenced the strategies of large technology companies.Methodologies Selection of companies based on predefined criterion. Data Collection Sources include company websites, Press Releases, SDC,Gartner Press Releases, Data Monitor. Study the individual companies. Develop the Taxonomy of Software Companies and find the market size. Fit them into the Taxonomy of Software Companies. Study the acquisitions of the companies over last 5 to 7 years Study some of the high growth segments. Observations & Insights. Predictions.
  3. 3. Selected CompaniesHewlett-PackardIBMMicrosoftOracleDellCisco SystemsIntelSAPEMCCriterion Used for filtration•Fortune Top 100 companies by Revenue.•Fortune Top 50 companies by Market Value.•Fortune Top Computer Software Companies.•Fortune Top IT Services Companies.•Companies having operations in India.
  4. 4. Worldwide IT SpendingLonger-term, server spending will be curtailed by virtualization, consolidation and, potentially, cloud computing.The infrastructure market (all the software to build, run and manage an enterprise) is the largest segment in terms ofrevenue and the fastest-growing through the 2014.The hottest software segments through 2014 include virtualization, security, data integration/data quality andbusiness intelligence.Web conferencing, team collaboration and enterprise content management are forecast to have double-digitcompound annual growth rates (CAGR), in the face of growing competition surrounding social networking and content.
  5. 5. Computing CyclesSource – Morgan Stanley (Nov, 2010)
  6. 6. Taxonomy of Technology CosSemi conductorStorageServersVirtualizationOperating SystemDatabaseMiddleware & IntegrationApplicationCloudSoftware ServicesERPCRMSupply ChainBI&AnalyticsServers, Tools & PlatformsSecurity&ComplianceNetworkingApplication Dev SoftwareNetwork & Nt Srvc MgmtNetwork InfrastructureContent ManagmentSoftware as ServicePlatform/HW as ServiceProj. & Portfolio MgmtIT Infra MgmtUnified Communication
  7. 7. Competitive Positioning - PresentSemi conductorStorageServersVirtualizationOperating SystemDatabaseMiddleware & IntegrationApplicationSoftware ServicesServers, Tools & PlatformsNetworking
  8. 8. 0500010000150002000025000300002005 2006 2007 2008 2009 2010ServicesHardwareSoftwareMajor Acquisitions -PeopleSoftSiebelHyperionBEA SystemsSun MicrosystemsRevenue in Software businessgrowing substantially.With acquisition ofSun, Oracle has enteredHardware segment.Company Analysis - ORACLE
  9. 9. Company Analysis - IBMMajor acquisitions:Sterling CommerceCognosNetezzaDivestitures:Personal ComputingPLM SoftwareMost recent focusCloud IntegrationBusiness AnalyticsIncremental Growth inSoftware, Middleware andServices01000020000300004000050000600007000080000900001000002005 2006 2007 2008 2009ServicesServersStorageSoftware
  10. 10. 0200004000060000800001000001200001400002005 2006 2007 2008 2009 2010Imaging and PrintingGroupPersonal Systems GroupServicesStorage & ServersSoftwareCompany Analysis - HPMajor Acquisitions –EDS3PAR3Com, Palm Inc.Mercury•Strong growth in Services Revenue•Consumer segment revenuestagnant•Drastic reduction in revenue fromHP Software•Lack in Enterprise SoftwareOfferings.
  11. 11. Company Analysis – SAPTwo major acquisitions1) Business Objects (Analytics)2) Sybase (Mobile Solutions)
  12. 12. Company Analysis - Intel1. Strong focus on Mobile & Security2. Plan to compete with ARM technology for smart phone chips.
  13. 13. 010,00020,00030,00040,00050,00060,00070,0002005 2006 2007 2008 2009 2010Desktop PCMobilitySoftware &PeripheralsServicesStorageCompany Analysis - DellMajor acquisitions:Perot SystemsEqual LogicCompellentSome recent –OcarinaBoomiSecureWorks•Major decline in Desktop PC segment•Slight increase in Laptop segment•Average performance in othersegments
  14. 14. Company Analysis - EMCMajor acquisitionsVMWare (2003)RSA SecurityData DomainIsilon SystemsVery strong onstorage segment.% Share of Storagecompanies adoptingVMWare for virtualization.
  15. 15. 010000200003000040000500002005 2006 2007 2008 2009 2010ServiceOtherAdvanced TechnologiesSwitchesRoutersCompany Analysis - CiscoMajor acquisitionsScientific AtlantaWebexNavini NetworksStarentTandbergMajor growth noticed in UnifiedCommunications (Video, Internettechnology) – reaching the enduser segment.
  16. 16. Company Analysis - Microsoft• No big ticket acquisition but lot of small acquisitions, attempted Yahoo! buy.• Strong Presence in all the segments of Enterprise Software & Development Tools.• Enjoys the competitive advantage due to the use of in-house closed technology.• It has created a niche and enjoys monopoly in that space leading to extra-normalprofit on all it’s softwareofferings.• High focus on Mobility and Entertainment Business.• One stop shop.010,00020,00030,00040,00050,00060,00070,0002005 2006 2007 2008 2009 2010Entertainment andDevices DivisionMicrosoft BusinessDivisionOnline Services DivisionServer and ToolsWindows & Windows LiveDivision 02,0004,0006,0008,00010,00012,00014,00016,00018,00020,0002005 2006 2007 2008 2009 2010Windows & WindowsLive DivisionServer and ToolsOnline ServicesDivisionMicrosoft BusinessDivisionEntertainment andDevices Division
  17. 17. Acquisitions by Segments
  18. 18. BI & Analytics – Major Acquistions2006 2007 2008 2009 2010 2011
  19. 19. Storage– Major Acquistions2007 2008 2009 2010 20112007 2008 2009 2010 2011
  20. 20. Virtualization– Major Acquistions2007 2008 2009 2010 20112007 2008 2009 2010 2011Rembo Technology
  21. 21. Networking– Major Acquistions2007 2008 2009 2010 20112007 2008 2009 2010 2011(ProCurve )
  22. 22. Middleware – Major Acquistions2007 2008 2009 2010 20112007 2008 2009 2010 2011
  23. 23. Trends – Mega VendorsERPCRMBI &AnalyticsMiddlewareServer/StorageDatabaseVendorMegaVendorBI &AnalyticsCloudSmarterPlanet*Server &PC CoMegaVendor
  24. 24. Trend - MicrosoftPureplaySoftwareMobilityCloudComputing
  25. 25. Trends – Niche PlayersWirelessMobilitySecurityVirtualizationSecurityPrivate CloudWebCollaborationVideoCollaborationUnifiedComputingSemiconductorStorageNetworkInfra
  26. 26. The Infrastructure BattleVirtualComputingEnvironment(VCE)CiscoVMWareIntelEMC
  27. 27. Strategic Focus AreaBI & Analytics, IntegrationStorage, Mobility, ServicesStorage, Virtualization, SecurityBI, MiddlewareMobile Apps, DatabaseStorage, Mobility, ServicesWireless, SecurityCollaboration/Video, Unified Computing SystemMobility, Cloud Computing
  28. 28. Strategic DirectionMega Vendors Focused Vendors
  29. 29. Insights IBM & Oracle stands out in managing acquisitions well including divestitures. IBM is best positioned for one-stop-shop offerings to large enterprise customers. Oracle is one-stop-shop in making. It lacks Services offering in order to grab bigscale enterprise deals. Cisco, EMC and Intel – a significant strategic alliance in making, will give IBMs andHPs run in Storage and Cloud space. HP & Dell lacks strategic direction in the acquisitions. Microsoft has most coherent cloud strategy for the end users – both SMEs andlarge enterprises.
  30. 30. Money MattersCompany name P/E ratio Mkt Cap ($ b) Revenue ($ b) Net profit margin (%)Microsoft Corporation 11.47 227.37 62.48 30.02Intl. Business Machine... 14.24 204.79 99.87 14.85Oracle Corporation 25.32 170.17 65.22 22.87Intel Corporation 10.8 123.5 43.62 26.76Cisco Systems, Inc. 14.28 104.48 40.04 19.40SAP AG (ADR) 29.08 71.69 16.9 14.57EMC Corporation 30.9 56.24 17.01 11.58Dell Inc. 11.42 29.78 61.49 4.28Hewlett-Packard Company 13.18 105.84 126.03 6.95050100150200250P/E ratioMkt Cap ($ b)Revenue ($ b)Net profit margin (%)
  31. 31. Predictions Oracle going for acquisition of a Services company that canprovide scale – CSC is a good choice. HP & SAP forming strategic alliance – while HP lacksmiddleware and Software, SAP can not really pitch againstOracle and IBM due to lack of depth in it’s offerings. So, ithas choice to remain a focused player or need to forgealliance with a large Server/Storage vendor. Dell acquiring Citrix. With EqualLogic and Compellent buysDell is well placed in Server and storage. However Dell &Citrix would be strong alternative toEMC+Vmware, particularly in wake of it’s straining relationwith EMC after Compellent buy.
  32. 32. Emerging Trends• Consumer Computing moving to mobile and tablets. Its isexperiencing explosive growth as never before.• Enterprise Computing moving to Cloud – Public Cloud as well asPrivate Cloud.• SMEs are ahead in adopting Cloud based Software Service, whileLarge Corporates prefer to have Private Cloud.• Private Cloud will experience higher growth over the Public Cloud.• Virtualization seems to be the hottest of all segments.• Storage is experiencing explosive growth driven by growth in socialnetworking, videos and other user driven data (10x by 2011, 44x by2020).• Security remains elusive for most of the vendors, remains thebiggest concern for the corporates and potentially may slow downthe growth of Cloud based computing.
  33. 33. Send an email to forfull report.