By James Rogers, TheStreet

 

From Intel's (INTC) $7.7 billion deal for McAfee (MFE) to Hewlett-Packard (HPQ) and Dell's (DELL) ongoing bidding war for 3Par (PAR), tech M&A is back with a vengeance. So who's going to be next?

 

Networking, security and storage are three of the hottest areas today, according to experts, with Riverbed (RVBD), ArcSight (ARST) and CommVault (CVLT) all in the spotlight.

 

After a tough 2009, companies like IBM (IBM), HP, Dell and Intel now see a window of M&A opportunity, particularly given renewed uncertainty about the broader economy.

 

"I think that companies get the sense that we're not fully recovered," Brenon Daly, an analyst at The451Group told TheStreet. "Before we get deals knocked off by a double-dip recession or a mellowing in the economy, companies want to get deals pushed through."

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With growing cash hoards, it's hardly surprising that some of tech's biggest names are driving M&A, according to Bill Soward, the CEO of software specialist Adaptive Planning.

 

"There's no question that this cash-balance thing is becoming quite a challenge for these big companies," he told TheStreet, explaining that shareholders want to see cash put to good use. "I think that there are also some competitive pressures in play -- people are trying to redefine their business."

 

1. Riverbed (RVBD)

 

Riverbed, which sells products for improving traffic over wide-area networks (WANs) has been enjoying strong sales growth and is seen as one of the most attractive companies in networking.

 

"I have always said that Riverbed belongs inside HP," Daly of The451Group told TheStreet. "Riverbed is an outstandingly run company and is by far the most successful WAN traffic-optimization vendor."

 

There are plenty of other reasons Riverbed and HP would be a good fit, according to Daly.

 

Daly explained that Riverbed and HP already have a longstanding OEM relationship, not to mention that the networking firm is a big Cisco (CSCO) competitor. Cisco, of course, was once close to HP but stepped on its partner's toes by entering the server market, prompting all-out war between the companies.

 

The latest Goldman Sachs (GS) IT spending survey cited Riverbed, along with Aruba Networks (ARUN), as among the top market-share gainers in networking. Technology research firm IDC estimates the worldwide market for WAN optimization services will increase to $2.6 billion by 2015 from $1.4 billion in 2009, based on a forecast for a CAGR compound annual growth rate of 11.1%

 

Riverbed, which recently posted record second-quarter revenue of $126.2 million, plans a major push into the cloud-computing market. The company also recently clinched a major partnership with telecom giant Verizon (VZ), providing yet more evidence of its momentum.

 

With cloud services in the spotlight, Riverbed's stock is up almost 70% this year, and the company, which declined to comment for this story, currently has a market cap of $2.8 billion. For a company like HP, which has a cash position of $14.8 billion, a Riverbed deal could be money well spent.

 

2. ArcSight (ARST)

 

M&A chatter about ArcSight is rising to a crescendo.

 

"This has been a name that has had speculation of an acquisition for quite a while," Erik Suppiger, a networking and security analyst at Signal Hill Capital, told TheStreet. "It does make a strategic fit with a lot of the big systems integrators and big technology companies."

 

The Wall Street Journal reported last week that ArcSight has put itself on the auction block. Citing people familiar with the matter, the Journal said that potential buyers, including Oracle (ORCL) and Hewlett-Packard (HPQ), could pay up to $1.5 billion for the company. EMC (EMC), IBM (IBM) and CA (CA) are also possible purchasers, the report said.

 

"In a time of consolidation, I could see how it makes sense. ArcSight is a strong technology leader in the security information management space," Suppiger said. An ArcSight acquisition could open the door to both new accounts and additional services revenue, he added.

 

IBM, however, already has its own security information management technology, so Suppiger thinks that HP would be a more likely purchaser.

 

HP and McAfee are both said to have been interested in ArcSight before its 2008 IPO, so a deal would not be completely out of the blue. As a public company, ArcSight has come through with consistently impressive results, adding to its allure.

 

The Cupertino, Calif., company has declined to comment on the acquisition rumors, though Intel's McAfee deal appears to have reignited the security M&A market.

 

"Intel paid an almost four-times multiple for McAfee," Suppiger said. "It would not be hard for me to justify a seven-times multiple for ArcSight, given the growth that they have had, and the strategic nature of the acquisition."

 

3. CommVault (CVLT)

 

Could CommVault be another Dell storage target?

 

"Dell, NetApp (NTAP) -- any of those guys could be interested in this company," Brian Marshall, an analyst at Gleacher & Company, told TheStreet. "I do think they are a good target -- they are definitely relevant."

 

With a market cap of a little more than $1 billion, CommVault is about half the size of 3Par and touts its Simpana software as a way for companies to back up, archive and search growing volumes of corporate data. CommVault also champions something called data de-duplication, which ensures that identical pieces of information are stored only once, a key technology for reducing storage expenditures.

 

"Clearly, de-dupe, backup and disaster-recovery technology are important these days, and CommVault has a good software solution," Marshall explained. "CommVault is also a good takeover size. I think that an acquirer could pay a nice premium for it and it would be accretive pretty much from day one."

 

Despite posting disappointing first-quarter results, CommVault still offers an "impressive" gross margin of almost 90%, according to Marshall.

 

Crucially, Dell is already a reseller of CommVault's software.

 

With PC margins taking a hammering, Dell certainly has a big incentive to look elsewhere for profit, as evidenced by the company's $3.9 billion acquisition of services specialist Perot Systems. Storage, however, has hardly been a key area for the computer maker, although the 3Par bidding war suggests that this may change.

 

Set against this backdrop, investors have certainly been paying attention to CommVault. The company's shares have risen almost 19% in the past five days but dipped Monday on news that HP had upped the ante in the 3Par bidding war.

 

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