Will Financial Troubles Lead to Cheap Tech Acquisitions?

Ann All

While financial fallout from the U.S. credit crisis has many companies worried about losing business and/or making budget cuts, deep-pocketed tech giants could be shopping for startups. Thanks to a rapidly chilling investment environment, some little guys may be willing to cut big companies like Cisco and IBM quite a deal.

 

Indeed, reports Forbes, Cisco snapped up a bunch of smaller companies when the financial markets tanked following the Sept. 11, 2001 terrorist attacks, buying five in 2002 and adding another four in 2003. Cisco will no doubt suffer in the latest round of financial troubles, since more than three-quarters of its revenues come from the kinds of hardware and software that many companies have decided to delay purchasing for now. Still, just a few months ago CEO John Chambers said the company was looking to spend some of the its $24 billion in cash on acquisitions.

 

IBM is also in an attractive buying position, having turned in several surprisingly strong quarters thanks to its focus on services and cloud computing, two areas which help its clients cut their expenses, and its growth in emerging markets. Not as well-positioned, say analysts interviewed by Forbes: Oracle, which gets up to 20 percent of its revenues from business with banks, and Sun Microsystems, which markets its high-end servers to banks.



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