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Two old-time tech companies ripe for picking?

In 2008, you might just see a couple of deals that break the traditional pattern of mergers and acquisitions, says Jon Oltsik.

We are all used to mergers and acquisitions in our industry but usually these deals involve a big guy grabbing a smaller guy. Think Citrix Systems buying NetScaler, Cisco Systems purchasing WebEx, or Symantec jumping on Vontu. It's extremely rare to see larger or established tech vendors get gobbled up in a similar way. In 2008, I can foresee a couple of deals that break the traditional pattern.

First of all, I believe that either EMC, Hewlett-Packard, or Symantec will purchase venerable systems management vendor Compuware. Why? Compuware has a very extensive set of products and services that span from application development to network performance to mainframe management. Compuware is installed everywhere and the mainframe piece is especially valuable as it can get these vendors into deals where IBM has virtually no competition.

Compuware does about $1.2 billion in revenue each year and is sitting on over $900 million in current assets. With a market cap under $2 billion, the numbers make sense. Compuware could be a very attractive takeover target for one of these firms looking to expand its management footprint and push up market with bigger deals. Compuware could be a very attractive takeover target for one of these firms looking to expand into the management market and penetrate enterprise data center deals.

The second firm may be a bit more controversial. I think it's high time that Unisys is either acquired or taken private.

Here's the key for me: Unisys did nearly $6 billion in revenue last year and it's sitting on over $700 million in cash. Yet the company's measly market cap is around $1.3 billion. Granted, the company lost over $300 million in 2006, but anyone who knows this company tells me that it also has a lot of fat that could be cut quickly. Former insiders I know say that Unisys--like many turnaround companies--is run by its lawyers who add a ton of bureaucracy and cost. A progressive tech company could adopt a "Chainsaw Al" approach to Unisys, preserve its services value, and cut everything else to the bone.

Unisys could help another tech company really penetrate the federal government space as well. Last year, Uncle Sam coughed up roughly $64 billion on IT. Seems like a good market opportunity to me.

Yeah, it's easy for me to write this stuff: I have no skin in the game. Nevertheless, I think these firms are worth a look-see. Each acquisition would take money and chutzpah, but either company could add a lot of enterprise value to the right buyer.