Who’s the Next Buyout Target? 8×8, Inc. (EGHT), BroadSoft Inc (BSFT) and More

Page 1 of 2

This morning, when Oracle Corporation (NASDAQ:ORCL) announced its intention to buy digital communications specialist Acme Packet, Inc. (NASDAQ:APKT) , the move ignited a firestorm of speculation.

Is this the start of a buyout binge in the networked communications market, like the storage binge of 2009 or the data security party in 2010? Investors in the sector sure hope so. Oracle’s deal sparked huge gains in this sector, even as the broader market hit “pause” on its recent gains.

Speculation may be exciting, but does it make any sense?

8x8, Inc.Sonus Networks, Inc. (NASDAQ:SONS) gained 16% on Acme’s news, almost keeping pace with the 22% buyout premium on the deal target itself. The two companies are very direct competitors, focused above all else on the so-called session border controller devices that set up and manage Internet-based voice and video calls. So if Acme found a partner, shouldn’t someone come looking for Sonus soon enough?

Well, maybe. As a Sonus owner myself, I’ll admit that a buyout would be appreciated. The stock hasn’t done much for me over the last two years, due to the telecom industry’s seemingly endless reluctance to invest in truly next-generation technologies like voice over IP.

Sonus is also considerably cheaper than Acme, based on standard metrics like price-to-book or price-to-sales. But then, Acme is profitable today while Sonus isn’t. Any prospective buyer would have to stomach an extra-large dose of risk here. I’m not holding my breath for Sonus to find a buyer.

BroadSoft Inc (NASDAQ:BSFT) provides software-based alternatives to the hardware solutions wrangled by Sonus or Acme. This stock jumped 10% today, and got a favorable mention as analyst firm Needham poked and prodded the Acme deal’s implications.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!