5 tech companies that could use a bailout

If the government ever decides to rescue the tech industry, Sun, Nortel, Motorola, Yahoo and Sprint would top the list

Now that the government has pledged US$700 billion to bail out the financial banking industry and is considering lending US$25 billion to help the auto industry avoid bankruptcy, many tech companies may be wondering where to get their hands on government bailout cash. While tech companies may not have the same level of clout among Washington policy makers as AIG or General Motors, some of the industry's biggest players have been hit hard times in recent months and could certainly use a health infusion of cash to help them right their ships. Here's our take on the five biggest tech companies that are most in need of a helping government bail out.

Bailout Candidate #1: Yahoo

The numbers: Yahoo recently said that it would lay off "at least" 10 percent of its global workforce before year-end; third-quarter 2008 revenue only increased 1 percent over third-quarter 2007 revenue; third-quarter 2008 net income of US$54 million was just over one-third the size of its third-quarter 2007 net income of US$151 million; share price has declined by more than 60 percent over the past year, currently stands at around US$10.75 per share.

What's gone wrong: Look back to the heady days of last February, when Yahoo was confidently rejecting Microsoft's bid to purchase the company for US$44.6 billion. Apparently, Yahoo was pushing for Microsoft to increase its offer to US$56 billion, which would have translated to a value of about US$40 per share. What a difference nine months makes: Yahoo's share price is now hovering in the $10 range and its proposed arrangement to share advertising revenues with search rival Google was scuttled on fears that the US Department of Justice would block the deal from going through.

The turnaround strategy: At the moment, Yahoo is clearly rethinking its decision to reject Microsoft's bid from earlier in the year. Yahoo CEO Jerry Yang recently acknowledged at a Web 2.0 conference that "the best thing for Microsoft to do is buy Yahoo" and that he would be willing to sell the company "at the right price whatever that price is." Unfortunately for Yahoo, Microsoft CEO Steve Ballmer recently indicated that his company has "moved on" and that no deal was currently in the works.

Bailout candidate #2: Sun Microsystems

The numbers: Sun announced plans last week to cut 18 percent of its global workforce, or as many as 6,000 of its employees. In its most recent earnings report, the company posted a US$1.7 billion loss in the first quarter of 2009, down from its net income of US$89 million in the first quarter of 2007; its share price has declined by more than 80 percent over the past year and currently stands at around US$16.50 per share.

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