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Telecom Equipment Deals Dominate
According to researchers at The 451 Group, IT and telecom M&A activity hit $250 billion in the first half of 2006, a four-year high.
Telecom equipment vendors generated three-quarters of this deal volume as their industry consolidation mirrored that taking place in their carrier client base the year before. Some of the larger such deals were the $30 billion combination of Nokia’s and Siemens’ equipment businesses and Alcatel's $13.4 billion purchase of Lucent.
In contrast, the value of deals in the enterprise software sector declined 20% from a year ago while the number of deals shot up nearly 40%. Formerly, large competitors like Oracle and IBM had focused on big deals: today they’re drilling deeper into niche territory, in some cases supplementing the businesses they purchased earlier with add-ons. An example is Oracle’s $40 million purchase of Demantra, the planning and forecasting applications vendor, which will join Oracle’s retail product line, itself assembled from three prior acquisitions.
Finally, the software-as-a-service (SaaS) sector, now enjoying strong PE multiples, is beginning to see M&A activity: RightNow bought CRM vendor SalesNet and Salesforce.com nabbed Sendia, a specialist in mobile-device delivery.
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