Recession: Will Your Vendors Be Acquired?

Smart companies will hunt for good merger and acquisition opportunities, with stocks at multiyear lows. Here are the M&As to watch.

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Prey, continued

Yahoo Inc.

Symbol: YHOO

Stock price: $12.29

Off 52-week high: 64 percent

P/E ratio: 17

Market cap: $17.0B

Cash and short-term investments: $3.1B

Cash/market cap: 18 percent

If Microsoft was willing at one point to spend $48 billion on Yahoo, why not spend $31 billion just half a year later to get it? That's what one Yahoo investor -- not Carl Icahn -- is proposing.

Nvidia Corp.

Symbol: NVDA

Stock price: $6.81

Off 52-week high: 83 percent

P/E ratio: 7.5

Market cap: $3.8B

Cash and short-term investments: $1.7B

Cash/market cap: 44 percent

The graphics chip maker has taken the steepest fall of any of the companies profiled here. As Barron's Savitz put it: "I know the company is troubled, but it now trades at under 1x revenue -- or about 0.5x if you back out the cash."

VMware Inc.

Symbol: VMW

Stock price: $21.03

Off 52-week high: 83 percent

P/E ratio: 34.6

Market cap: $8.2B

Cash and short-term investments: $1.5B

Cash/market cap: 18 percent

Another high-flier that has fallen steeply this year, VMware, will start to see revenue and earnings put under pressure with Microsoft hot on its heels, investors believe. Microsoft has begun earnestly pushing its cheaper-and-good-enough competing Hyper-V virtualization technology, introduced in June.

Salesforce.com Inc.

Symbol: CRM

Stock price: $32.56

Off 52-week high: 57 percent

P/E ratio: 121

Market cap: $3.9B

Cash and short-term investments: $580M

Cash/market cap: 15 percent

Like VMware, Salesforce.com enjoyed a lofty stock valuation based on it being the market leader in a small but growing software-as-a-service niche. Though its stock price has been sliced nearly in half, the company still trades at a price/earnings ratio of 121. That could put off some buyers. So might its relatively small cash reserve of $580 million. It too faces competition from Microsoft and even Google.

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