Five Potential Java Industry M&As

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Jan. 27, 2003 11:08 AM


As the economy and stock market continue to struggle for strong support and positive direction, look for some major Java camp players to make significant moves. Most of which will establish the trend of hardware vendors acquiring the struggling or, at least, challenged middleware/software vendors. Therefore, here are five potential Java industry mergers or acquisitions to watch for in 2003 and 2004:

1. HP Acquiring BEA Systems

Hewlett-Packard is different from other enterprise server players like IBM and Sun. While IBM and Sun offer complete enterprise middleware/software solutions (Web app server, Java/XML/Web services IDE, DB) for its server customers, HP really does not, unless you count the now defunct Bluestone. Recently, HP partnered with BEA and Oracle to offer various middleware/software solutions with its servers. Some analysts and others have considered a Sun acquisition of BEA. That's not likely given Sun's poor finanical leverage in terms of cash and/or current market value in the equity market. Maybe, a merger is possible where Sun would stengthen its middleware offerings. However, HP will acquire BEA first if necessary before they would let Sun do anything.

2. IBM Acquiring Novell

IBM may acquire Novell. IBM's past ties to Novell in networking and as a recent distribution channel of WebSphere makes it the logical choice, especially as Novell augments its software offerings with new Java and Web services tools. Novell on its own will not make headway into the market, but it certainly offers potential ways to augment IBM's WebSphere solutions.

3. Dell Acquiring Sun

Looking at Dell's cash and strong equity market pricing per share versus Sun's lack of cash and relatively poor equity market pricing per share is an invitation to Dell to possibly acquire Sun Microsystems. In addition to Dell's financial leverage, Dell has been attempting to expand its market into the server-side arena. While Dell has made some in-roads into this arena, Sun already has established these ties with its current large business high capacity servers. Dell is also watching Sun's success in the small business arena with its Cobalt Linux servers. Such an acquisition would give Dell the tools and market share to succeed in the server-side business market. It would also eliminate competition as well. Then Dell would only have to worry about HP and IBM. In regards to the effects on Java, it would be interesting to see what Dell will do.

4. HP Acquiring/Merging with Oracle

If HP is not able to acquire BEA, they may find a way to acquire or at least merge with Oracle. Again, HP would like to own and control middleware and software solutions for its server hardware. While I believe that BEA is more likely to be acquired, Oracle does offer a database solution that BEA does not.

5. Sun Merging with BEA or Oracle

While there is merit for Sun to merge with either BEA or Oracle, politics, ego and the above make this the least likely to happen.

Others to Watch

Borland, Macromedia, and Adobe are other significant market players to watch: Look for Borland to merge/be acquired by either a hardware or a middleware vendor (i.e., BEA Systems, HP, and/or Oracle). Macromedia and Adobe could merge with Apple long-term as well. Time will tell.