Monday, April 6, 2009

A Sign of a Market Recovery - Acquisitions

A few weeks ago, before the Dow decided to run up close to 20% making it the biggest short term rally since the Great Depression, I stated that one of the signs of a recovery is when larger corporations begin buying up the smaller ones.

Well, it looks like the buying has begun. Google is supposedly in talks with the Social networking site to either buy, or make a search deal with them. If Google was to acquire Twitter it would give them an instant inroad into the live search areas. Twitter is used for people to write a short 140 character or less message describing what is on their mind, or what they are doing. Because so many people use them, it is very easy to search Twitter for a word, and see just how that word relates to current events in real time. Google could really take advantage of that kind of information.

There are also many other deals in the works. IBM was, and maybe still is trying to acquire Sun Microsystems, and the pharmaceutical industry is starting to gain buzz about all sorts of possible acquisitions and mergers. This is a sure sign that larger corporations believe that the smaller ones are currently undervalued, likely because the whole stock market as a whole is undervalued. Look for the coming months to even heat up more with deals being made in just about every industry there is. Earnings season is here, and next week Google as well as Apple and many other tech firms will be announcing earnings. It should be interesting to see what they are and what it may say about the economy in general.

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