Hi-tech takeover targets offer best chance of gain
Dylan Collins, Web entrepreneur
I THINK 2011 will see increased ecommerce and mobile internet growth. But I also suspect 2011 will also herald a few large acquisitions, particularly from some of the big internet companies in the US and Asia, as they start to deploy their Himalayan-sized mountains of cash.
With the exception of one, my picks are entirely based on companies who I suspect might end up being owned by other people by the end of the year, obviously at a fairly healthy premium to their current price. These companies are acquisition targets for various reasons. Some have fallen into second or third place in their markets and while still valuable, are effectively stuck in that position. Others are geographically constrained.
Research In Motion (RIM), those formerly brilliant Canadian engineers who make the Blackberry, have a very solid corporate business but sadly just don't have the design flair to take on Apple. I think Google will acquire them to solidify their corporate hold for their Android cellphone business.
A few short years ago, public retail companies were trading at almost 20 times earnings. Today, any time they break above seven times there are whoops of delight from the boardroom. Game Group have a fairly solid hold on the UK video games retail market and you can pick them up for £250m (€294m) and still have change for a football team.
Ubisoft is the video games publisher behind games like Splinter Cell, Rainbow Six and Assassin's Creed. It makes extremely high quality games but more and more it appears it lacks the balance sheet to compete with the bigger publishers.
Paddy Power is extremely successful in its territories of focus but I wonder if it mightn't attract the attention of a larger company.
Yahoo is absolutely on the other end of the scale. No definition, no strategy, no coherence and yet still making money (for now). It's very simple -- buy the company, fire the entire management team and focus on something.
Finally, Google. I think 2011 will see increased Android growth and maybe Google will buy some stuff that actually generates earnings too.