Buy Out?

2004-11-05 01:31:39 AM
11:36AM Mike Tarsala's TechWatch Alert -- BORL (BORL) 11.47 +0.59: The
same rumor going around in April that Microsoft will buy Borland is
circulating again today. After talking to multiple sources this
morning, many are giving at least some credence to the rumor, saying
it could be a matter of WHEN Borland sells out to a larger company,
rather than a matter of IF. Several money managers noted that BORL's
current management seems unlikely to stick around over the next 10
yrs, noting several executives recently have come from larger cos, and
have stock options in a firm with a flagship JBuilder product that is
becoming a commodity. (We note that COO Scott Arnold joined from
McKinsey last year, and CMO Rick Jackson joined from BEA Systems.)
While noting that there could be other more likely buyers of BORL,
Jason Breuschke at Pacific Growth Equities said it would not be
completely surprising if MSFT was interested. He notes BORL is the #1
Java development tools provider, and #2 in Microsoft platforms, behind
MSFT. He says buying BORL would let MSFT improve interoperability
between Java and MSFT's .NET -- something customers have asked for.
But also of note, buying BORL could give MSFT more control over Java.
And Breuschke adds that buying BORL could keep MSFT from getting hurt
if a competitor were to buy BORL, and take control of BORL's .NET and
other Microsoft development tools. One fact that could throw cold
water on a potential deal being announced is that it doesn't appear
that BORL is hurting financially, so from BORL's perspective, there
doesn't seem to be any hurry.