Wall Street Beat: IPOs, M&A, chip news stir tech optimism

IDG News Service - Zynga's initial public offering Friday, a raft of acquisition announcements this week from IBM, Salesforce and others, and some upbeat reports on the chip and hardware sector are putting a positive spin on year-end news for the tech sector.

"The IPO market normally closes down by mid-December so this week's calendar wraps up 2011 with a blaze of lightning and a clap of thunder to produce the busiest week of the year," notes John E. Fitzgibbon, founder of IPO Scoop, in his weekly report.

Eleven IPOs were launched this week, raising about US$3.5 billion,[b] the busiest week in public offerings since Nov. 12, 2007, before the recession, Fitzgibbon noted. Two of the big headline-grabbing IPOs -- Zynga and Jive Software -- were in the tech sector.

Zynga, developer games including CityVille, FarmVille, and Mafia Wars, raised $1 billion, with shares priced Thursday night at $10, the high end of its marketed range. Shares slipped slightly in public trading late Friday morning, down by $0.20 to $9.80, a bit of an anticlimax. Nevertheless, Zynga is making the biggest splash on the market by a U.S. Internet company since Google raised $1.9 billion in its 2004 launch.

Social network software provider Jive Software priced its shares Monday at $12, above the $8 to $10 that was expected. Though shares were trading down slightly Friday morning from Thursday's close, they were still going for a healthy $15.05.

The rise in mobile computing and the digital consumer market coupled with a more stable credit market could pave the way for a new wave of IPOs and should lead to an increase in mergers and acquisition activity, according to several reports.

Recent IPOs by Groupon and LinkedIn, this week's IPOs, plus Facebook's anticipated public offering in the first half of next year "may re-open the offering window, giving some private companies the opportunity to go public as an alternative exit," said Jeff Liu in a report from Ernst & Young .

Mergers and acquisitions could also get a boost, he noted.

"We are entering a transformative cycle for technology propelled by mobility, the evolution of cloud computing and the explosion of data," Liu said. "Despite a flat 2011, 2012 will be a strong year for technology M&A as these disruptive technologies spur significant strategic deal-making activity among technology companies and PE [private equity] firms looking to generate returns."

M&A activity this week included Salesforce.com's announcement Thursday that it will acquire cloud-based performance management vendor Rypple, for an undisclosed amount. The deal comes in the wake of SAP's announcement to buy cloud HR software vendor SuccessFactors.