Tech Giants to Spend More on Acquisitions in 2011

Technology companies that fueled over $100 billion in US acquisitions last year are likely to spend more in 2011 as they race to harness surging demand for cloud computing and security services. Intel, Hewlett-Packard, and IBM led purchases of over 2,700 companies, and their cash piles accumulated during the recession are waiting to be spent. The dollar amount of announced tech deals gained 12% last year, with a 26% jump in worldwide mergers. Buyers aim to capture the $3.4 trillion in information-technology spending projected by researcher Gartner for 2011, a 3.5% increase from 2010.

Key Takeaways:

• Tech giants such as Intel, Hewlett-Packard, and IBM are likely to spend more on acquisitions in 2011, driven by surging demand for cloud computing and security services.
• These companies have accumulated cash piles during the recession, which they are eager to spend on strategic acquisitions.
• The dollar amount of announced tech deals increased by 12% last year, with a 26% jump in worldwide mergers.
• Buyers are aiming to capture $3.4 trillion in information-technology spending projected by Gartner for 2011, a 3.5% increase from 2010.
• Cisco Systems and Oracle are driving the convergence of services, software, and hardware as they compete to become the most relevant to chief technology officers.
• More companies are moving to cloud computing, allowing them to access information over the internet from external data centers.
• Venture financing is expected to increase in 2011, with active investments in cloud computing, clean technology, alternative energy, life sciences, and internet.
• Groupon, the internet-coupon service with over 35 million users, may be among those going public in 2011, raising up to $950 million.
• 94 technology companies held IPOs in 2010, up from 54 in 2009, according to Bloomberg data.

Statistics:

• Over $100 billion in US acquisitions were fueled by tech companies last year.
• The dollar amount of announced tech deals gained 12% last year.
• There was a 26% jump in worldwide mergers last year.
• The projected information-technology spending for 2011 is $3.4 trillion, a 3.5% increase from 2010.
• Gartner estimates the 2011 information-technology spending growth will be 3.5%.
• 94 technology companies held IPOs in 2010, up from 54 in 2009, according to Bloomberg data.
• Groupon may raise up to $950 million from the sale of preferred shares.

Sources:

• Bloomberg News
• Wilson, Sonsini, Goodrich & Rosati law firm
• Gartner
• Bloomberg data
• Waterloo Region Record