Dec. 24 - Richard Beales and Robert Cyran discuss why long-established but low-growth tech giants may overpay for acquisitions in 2014.
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Big old school technology companies may be tempted in the coming it's at its. Spend way to much buying some younger technology companies. Well we've seen this happen in the puzzle -- Microsoft HP you have space. Arguably paid too much. Things but what do you say listen I wouldn't say arguably HP's at a table eight debt especially for hater he's written down eighteen -- -- -- -- -- -- that harbors under a lot of pressure right now for two reasons first off so a lot of things that used to be done with hardware like. Machines are -- being -- software to its growing companies like Cisco is Cisco IBM this they'll be a big. Tech community. On the other thing is that a lot of productions and offshore so that the rise of these companies that do a lot cheaper expands its relative stuff cheaper than than normal -- And so what happened is in these companies they're getting old and an end. They're revenue hasn't grown protecting your finding -- Medicaid -- yet. I'm IBM it's it's shrank for like six quarters in early HP even more right that's usually really bad sign -- -- companies because look at a meaning of these and quite old companies some of -- actually but you still think they ought to be going something's not yet and and the -- tech companies and what's tech company starts to get to trouble it's very difficult turnaround. IBM did -- tonight in the same time. Some other good residents were actually growing up that the Libyans kind of back to the same place that I really getting exactly the same. -- and a -- you know they can go out they can buy these companies that the problem is that they overpaid first off because they control premium. And the second it -- -- numbers because you that they Costas -- capitalize so. But it means is that companies it makes the -- the better than they actually are right I'm seeing problems with HP for instance are down eighteen eighteen billion think it was a -- -- together right it's just a lot of lot of money lost. Right and what kind of companies are we talking about a minute what what the other areas. Forward better both companies they might. They're -- definite buy parts opera companies -- -- they're gonna -- -- software immigrant -- one of the best parts -- so companies like oracle for instance they're gonna go out and buying database company that is Davis Clark McLeod IBM will do similar things to school buying networking companies that brought you virtual network I think you -- -- that the cheapest of these is NetSuite which -- of sort of 400 times forward earnings. So this is not this is she didn't know yet exactly and make their numbers look. Okay we'll leave it that state and federal breaking these predictions for the year ahead.
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