A Peek Into The Takeover Market In 2010 (MSFT, GOOG, BBBB, ORCL, VRSN, AOL, JAVA, DELL, PLCM)

According to James Altucher, the stock market is just about 60% higher than its lows, the country’s GDP growth has turned positive and companies are likely to start increasing their workforce as they rebuild their inventories. Moreover, stocks are cheap, especially considering that interest rates are at record lows. Thus, investors should ignore rumors, such as P/E ratios being too high, bailouts failing or markets moving, because of the manipulations of the US government.

James Altucher believes that with stocks being valued cheaply, there is a high possibility of companies with talented management and excess cash and liquidity going on a spending spree. This belief is underlined by ongoing takeover attempts by Microsoft (NASDAQ: MSFT), Google (NASDAQ: GOOG) and Oracle ((NASDAQ: ORCL).

James Altucher thinks that the following acquisitions might happen in 2010:

Purchase of VeriSign (NASDAQ: VRSN) by ORCL: ORCL is facing trouble in getting the Europeans to agree to its purchase of Sun Microsystems (NASDAQ: JAVA). The European regulators think that the acquisition will give ORCL control of MySQL and allow it a monopoly in the databases segment. Through the purchase of JAVA, ORCL will regain its hold on the startup field, which it had basically lost to JAVA. Similarly, ORCL might just be interested in acquiring VRSN, which has the monopoly on dot-com registration. VRSN has $800 million in net cash on the books and it is trading at a low multiple over the EBITDA.

Dell (NASDAQ: DELL) Buys Polycom (NASDAQ: PLCM): With businesses preferring to conduct conferences and meetings through video conference, instead of sending their executives on business travel, the demand in the video conferencing market is rising. If DELL acquires PLCM, it will be in the No. 2 spot in videoconferencing, after Cisco Systems (NASDAQ: CSCO), while gaining entry into the much-wanted enterprise space. Moreover, PLCM has $400 million in cash and trades at just 11 times the EBITDA. PLCM is also expected to post 50% earnings growth in 2010.

Google (NASDAQ: GOOG) Buys Blackboard Inc (NASDAQ: BBBB): GOOG has been wanting classroom teachers to use its email and collaboration tools. However, GOOG has been unable to beat the leader in the classroom market, which is growing at more than 20% annually. With classroom text and interactions moving online, the market is likely to retain this growth for the next 20 years. BBBB is the leader in the space and, despite such impressive growth, the company’s stock is trading at just 19 times the forward earnings.

AOL (NYSE: AOL) Acquired by MSFT: AOL is making the right moves by divesting non-beneficial assets (ICQ and Bebo), through which it will realize over a billion dollars. Moreover, AOL is generating sufficient cash to pay for its entire market cap. There is a high possibility of AOL shares touching $35 this year.