“White hot” Qlik, Jive, Datawatch, Imperva top short list of likely tech acquisitions

Coming off a week when EMC bought Aveksa for identity management smarts and IBM closed its previously announced SoftLayer deal,(s ibm) don’t expect the M&A to stop any time soon. According to Sanford Bernstein Senior Analyst Toni Sacconaghi, hardware companies remain on the prowl for acquisitions that can bolster their cloud and services capabilities and use as an escape hatch from lower-margin hardware products.
And what’s on the most-wanted list? “Across the board, white hot areas for acquisitions remain business analytics, security, and cloud capabilities and potential targets include SourceFire, Solar Winds, and Qlik, in our view,” Sacconaghi wrote in a research note released Tuesday.
In business intelligence Datawatch and Qlik Technologies are companies to follow;  in security it’s Imperva(s impv), SourceFire(s fire) and Palo Alto Networks(s panw); and in social media — where virtually every company from Oracle and Salesforce.com(s crm) to IBM has been shopping — Jive Software (s jive) comes up aces, according to the report.

Hardware is an ugly business

The problem with hardware, as Dell(s dell), HP(s hpq), and now Oracle(s orcl) can attest, is that revenue from PCs and servers continues to swoon as buyers flock to tablets and smartphones and don’t feel any pressing need to update aging desktops, laptops, or even servers.
And the move to cloud computing is consolidating workloads in cloud data centers that run inexpensive no-name servers. That’s bad news for Dell, HP, IBM (and now Oracle) all of which counted on selling server upgrades — the higher-end the better — into corporate data centers every three or four years. Hardware is an ugly business. But if these companies can surround their hardware with cool software and perhaps entice some traditional customers  to buying other things, well it gets less ugly.

Buying their way into diversity

And that brings me back to acquisitions. HP’s ridiculous $10 billion buyout of Autonomy two years ago was an attempt to jump start its entry into cool, potentially higher margin new businesses like enterprise search and augmented reality. That didn’t work out so well, but that’s because the price was crazy, not because the idea of diversification was nuts. As Sacconaghi reminds us, HP has said it won’t go after big deals through the end of its FY 2013, ending in October, and will instead focus on smaller “tuck-in acquisitions” into the following year. As HP execs have acknowledged, it’s first post-Autonomy deal will be “highly scrutinized” — the understatement of the decade.
So what sub-$1 billion deals might make sense for HP?  Actuate, Datawatch and Magic Software. “We expect HP to continue to focus on (1) cloud; (2) security; and (3) business analytics,” Sacconaghi wrote.
EMC is the most likely of these hardware companies to pursue major acquisitions (worth more than $2 billion) in his view. And, he thinks the storage giant will target big data, security and systems management companies. Likely targets include the usual suspects:  SourceFire; Imperva, Palo Alto Networks; Solar Winds(s Swi) and Qlik Technologies (s qlik).
In other words, don’t relax just yet: there’s more buying and selling to come.