3 Big Winners in Tech’s Merger Mania

Making money with your computer

Facebook_logoFacebook’s (NASDAQ: FB) acquisition of WhatsApp for $16 billion is either pure genius or absolute insanity. Whatever the future holds for this deal, the stunning price paid for a private technology company – about double the price Google had recently offered for WhatsApp – kicks off dot-com re-dux.

Facebook is betting 10% of its (one could argue) already-inflated market cap on an unproven company. Well, unproven from a profitability standpoint.

What WhatsApp has proven is an ability to capture eyeballs.

Oh no. Remember the term “eyeballs” from the heady days of the first dot-com bubble, when all that mattered was visitors to your website?

Never mind profitability. The mantra is “spend whatever it takes” to get the eyeballs . . . and in the process destroy any hope of making a profit – ever.

Just like the first dot-com bubble, this one too shall collapse. Along the way, though, there are some likely beneficiaries of the new technology bubble emerging. Of course, I am referring to Wall Street.

The Facebook – WhatsApp merger will generate close to $100 million in fees for advisers representing both companies.

The day before the deal was announced, Ernst & Young issued a report that said 2014 is going to be a strong year for M&A in technology, at worst. At best, it could be a blockbuster year.

The arms race appears to be on. If Facebook’s move is any indication, it looks more likely to be a blockbuster. Whether these deals pan out or not, the advisers are going to be laughing all the way to the bank.

Here are three companies that will benefit from the new tech mania:

James (Jamie) Dlugosch is a contributing editor to MSN Money, The Street.com, InvestorPlace.com and Traders Reserve. He has a long and distinguished career in the investment industry that includes editorial and publishing stints with the highly rated Rational Investor, The Prudent Speculator and the current Penny Stock Winners. Jamie was a contributing editor to InvestorPlace Media where his content was syndicated to numerous on-line financial sites including MSN Money and AOL Finance. At the turn of the Millennium he was the President and CEO of Al Frank Asset Management where he honed his skills under the tutelage of the well respected guru, Al Frank. With The Rational Investor Jamie adapted Al Frank’s long-term market beating strategy to reduce risk and increase ease of use for subscribers. He was quickly rewarded for his efforts by compiling the second highest total return of all investment newsletters in 2004 according to The Hulbert Financial Digest. His investment approach has produced winning returns in competitions held by MSN Money in their long running Strategy Lab. He also has successfully raised private capital for a variety of private ventures including the purchase of Al Frank Asset Management, an investment now worth many times its original cost. Jamie is frequent guest and contributor to a wide range of financial television, radio and internet broadcasts including CNBC, Market Watch and MSNMoney. Jamie holds a B.A. in Political Science from UCLA and a Masters in Business Administration (MBA) from the University of North Carolina, Chapel Hill. He resides in Minneapolis, MN with his wife Sarah and two daughters, Julia and Ellie.

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