Exactly what Infosys must be doing with its cash hoard...!

Instead of grumbling about client indecision on discretionary tech spends or reminding doubting analysts about its choice for marathon over sprint, Indian outsourcing vendors like Infosys must be focusing on acquiring smart startups like NICIRA that VMware is seeking out to buy giving it a massive leap in its technology focus.

With its NVP, or network virtualization platform, Nicira (pronounced "nice era") will ostensibly do for networks what VWware has done for computers -- magically create multiple virtual networks that work together in tandem but unleash much more computing power than a single network could ever achieve.

Shibulal, are you listening...?  It's time you let loose those purse strings after real tech innovators instead of chasing me too System Integrators.  That will be a great favor not just to your existing shareholders but also a nice parting pat to those past employees waiting to liquidate their stock options at a fairly reasonable price that seems a daunting task now.. :-)

Speculation time?

When stock prices take the kind of beating that we're witnessing, the emergence of potential bargains always leads to a sort of fantasy league for takeover speculation, in which analysts and pundits play at making matches between the vulnerable and their possible suitors. These hypotheticals should always be taken well salted, but they still can make for interesting thought exercises.

The player is Canaccord Adams analyst Peter Misek, who gave fresh legs to a possibility -- that Microsoft might snap up RIM. The logic - Microsoft would have its own smartphones to compete with Apple's iPhone and the devices running on Google's Android platform.

Peter Misek feels RIM is a massive strategic fit for Microsoft and they have a standing offer to buy them at $50 (a share). RIM's shares traded at close to $150 just a few months ago, but stock price slides so fast lately and it's within a few bucks of that offer. The way things are going, that's hardly a stretch as it would make the deal worth just over $28 billion, and Microsoft is flush enough to pull it off without having to tap the credit markets. The question is whether MSFT really feels compelled to get into hardware wars or if it's satisfied to compete on the platform side with Windows Mobile. Neither company graced the speculation with a comment.

Meanwhile, up at RIM the folks I guess are trying to stay focused, getting the just unveiled iPhone competitor launched ("BlackBerry Storm") and as rumor has it, they are already working on the next two generations.

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I've got my new phone... Can I have a holster please?

There is a certain suspicion that someone have quietly slipped in a generous dose of steroid into Redmond water supply. Close on the heels of its hostile bid to swallow Yahoo, MSFT quietly bought Danger, a Palo Alto company best-known for creating the technology behind T-Mobile's chic Sidekick smart phones, for $500 M.

X-box, Zune and now sidekick… Is MSFT getting serious about hardware? Well, with a competitor like Apple around (now that the CEOs share the same first name), it ain’t got no choice. RIM has its Blackberry, Palm has its Treo, Apple has its iPhone, but Microsoft had nothing before. Now it's got this… But as Erick schonfeld says “mobile handsets business can be brutal” and he points to Motorola.

I agree. Tell me something… with so many features loaded into a cell phone, why not someone design a holster?

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When in doubt, whip up bidding frenzy...

OK. So Yahoo has help at hand. Microsoft can’t have it easy if there’s gonna be a bidding war, especially with Google in the fray.

This puts us, users - officially in the spin zone, where the air gets cloudy with FUD. VC Fred Wilson says “Consolidation of ownership of web services is not a good thing for the Internet. If you think about the Internet, it's a huge distributed network of loosely connected services owned and operated by literally millions.”

Fred quotes several analysts outlining the way forward for Yahoo –

• Outsource search to Google. That will provide at 25% boost to cash flow according to Citigroup analyst Mark Mahaney. I have heard that this is worth about $10/share in Yahoo!'s stock price.
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• Dividend out to shareholders the interests in Yahoo! Japan and Alibaba. They are worth $12/share according to this WSJ article.

• Split up the remaining company into several businesses which can be independent public or private companies. I would put Yahoo! home page, search, MyYahoo, and email into one company and let that be new Yahoo! The other assets could be sold off or assembled into additional private or public companies.

Being a prolific user of the Web, I loath any one player dominating this universal medium. While the Internet rewards competitive innovation, Microsoft has a checkered history. It frequently sought to establish proprietary monopolies -- and then leverage its dominance into new, adjacent markets. On those lines, the acquisition of Yahoo will allow Microsoft to extend unfair practices from browsers and operating systems to the Internet. That’s a bit scary.

That was my perspective as a user of search. Now come to think like a Yahoo stock owner. When pressed between a rock and a hard place and with no clear growth strategy that Yahoo has now, it’s better to sell and cash out. There are a lot better things that one can do with the kind of money MSFT or any rival bidder might offer. With America looking into that deep pit of a recession, the next boom could be a few years away. So I prefer cash in hand so that I can buy some assets on the cheap. There could be several foreclosed houses coming at bargain prices.

I have no illusions of Yahoo climbing up the ladder on its own, not at least as long as Google is around. So why not gradually swap it for some Google stock itself – at $544 a share, I’d say it’s not bad. Or to take a slightly contrarian view (if you have some guts, that is) go stock up on a Citigroup or Merrill Lynch that come dead cheap now thanks to the mortgage meltdown. The tide would soon turn since SWFs are bailing them out and they’ll be right back at their prime, may be with different owners. Meanwhile Yahoo board can order a re-valuation of its shares in the interest of its shareholders, to give them a better idea of their stock’s worth and pray for the time lag to whip up some bidding frenzy as a bonus… Get me Larry Ellison, please - will ya...!

Tell me, how do you like my little spin…?

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Kagermann endorsing Ellison !

For some like Larry Ellison of Oracle, acquisitions are a disease; or call it ethos, if you spot a pattern. How did Ellison resist his urge to go shopping for such a long while? Before we could hear a contented belch emitting from him after gobbling up Seibel systems and PeopleSoft, here he goes again, out to get BEA Systems - maker of "middleware," software that integrates Net applications with databases. Ellison is making an offer @ $17 a share in cash, valuing BEA at $6.7 billion.

Founded in 1995, BEA is considered a valuable asset largely because it has about 15,000 customers that generate more than $600 million in annual revenue for software maintenance and upgrades. Activist investor Carl Icahn owns a 13.2% stake in BEA and is angling for more bidders – Oracle rivals SAP, HP and IBM not ruled out.

SAP initially derided Oracle's acquisition strategy as misguided, but earlier this week signaled it is ready to go on the prowl too by agreeing to pay $7 billion for Business Objects SA, a maker of software that helps companies analyze their internal data. That deal countered Oracle's $3.3 billion purchase of Hyperion Solutions earlier this year.

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I would say that’s how Kagermann endorses the Ellison brand.

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