Why I'm optimistic about software M&A
It has been an interesting week of signals about what the future might hold for the software M&A market. The Dow inched over 10,000 before falling back a little and the NASDAQ climbed over 2,150. We haven't seen those levels in the stock market for more than 12 months. Perhaps better news for technology companies comes from Intel's earnings announcement of third quarter results. Strong consumer purchases of PCs and mobile devices resulted in earnings and margins that were well above analyst estimates.
Yet more industry optimism is also likely to result from Microsoft's pending release of Windows 7. Not only is the new OS expected to re-energize Microsoft's sales, but the benefits will extend far beyond Redmond to benefit tech companies around the globe according to an IDC report titled The Economic Impact of Microsoft’s Windows 7, Worldwide, (sponsored by Microsoft). Between launch of Windows 7 and the end of 2010 the technology "ecosystem" around Microsoft will sell a total of "$320 billion in products and services" and invest "$115 billion developing, marketing, and supporting products and services built around Windows 7".
Stable financial markets, growth in hardware sales, and release of a major new operating system are likely to be accompanied by strength in the software industry as a whole. And that means larger software companies are going to be shopping for smaller firms with the new products, new technologies, user bases, and domain expertise they need.
Posted by MarkReed, Executive Vice President on 16 October 2009
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