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Microsoft made a big bet earlier this month when it gobbled up Skype for $8.5 billion, a move that got some VCs salivating at the prospect of the software giant returning to the M&A scene. Now, a report out today from GigaOm Pro and TheStreet.com looks at how five large-cap, high-tech companies, including Microsoft, may spend their cash in 2011. The authors write that Microsoft is a well-managed company, but it is in “dire need of an innovative spark.”

Was Skype enough of that spark? Maybe. Maybe not. (I know some of you out there in the community believe that Microsoft overpaid for Skype, and would have liked to have seen those dollars flow elsewhere).

The authors have a few other suggestions, including key expansion areas in mobile, cloud computing and Internet search. They also note that a “move into hardware” is also a possibility.

In cloud computing, the authors suggest that Citrix might be an attractive candidate since it already has a 20-year alliance with Microsoft. Couchbase also is offered as a potential target.

In mobile — where the authors say that Microsoft is especially “vulnerable” —  WHERE Inc. (a maker of location-based apps); Jumptap (a mobile ad company); and Mobclix (an iPhone app maker).

In an effort to combat Google, the report also suggests that Microsoft could decide to build an ad network specifically for Facebook. If that occurs, Microsoft could go after two companies with Seattle roots: Audience Science or BlueKai. (Here’s our report from yesterday on BlueKai, detailing why CEO Omar Tawakol relocated to Cupertino).

The authors also suggest LinkedIn, though with a $9 billion market cap after last week’s IPO it could be too rich for Microsoft at this time.

In one of the more intriguing possibilities, the authors also suggest that Microsoft could bolster its Xbox and Kinect franchises by going after a gamer maker like Rovio which produces Angry Birds. Another candidate in the gaming arena is Prime Sense, a maker of 3-D vision technology.

In addition to Microsoft, the report looks at IBM, Cisco, H-P and Oracle. In the case of Oracle, the authors write that it may go after Box.net in order to create a low-cost alternative to Microsoft’s Sharepoint.

The report also provides an overall picture of the tech M&A market, suggesting that acquisitions will likely increase this year based on the tens of billions of dollars that tech giants are currently hoarding. (Microsoft alone has about $50 billion in cash).

“Given the technology sector’s prospects and available cash, it perhaps faces the loudest calls from investors who want to see the companies expand and boost profits,” the report says.

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