By Ritsuko Ando - Analysis
NEW YORK (Reuters) - The global technology industry is expected to consolidate further as companies seek niche technologies and greater economies of scale, even as troubled credit markets make it tougher to raise money for deals.
Most executives attending the Reuters Global Technology, Media and Telecoms Summit this week said they expect more mergers and acquisitions in their sectors, whether that be software, computer services or network operators.
"I do think valuations are attractive now, and I think we have advantages in this framework 'cause we have a very healthy balance sheet, strong cash generation, good cash on hand," said IBM (IBM.N: Quote, Profile, Research, Stock Buzz) Chief Financial Officer Mark Loughridge.
"It used to be, 10 years ago, when we made the Lotus acquisition, it was kind of an opportunistic approach doing M&A. Now, it is very much an operational aspect of our business."
Even with the pullback in private equity-led leveraged buyouts, the tech industry has seen no shortage of dealmaking this year, including Hewlett-Packard Co's (HPQ.N: Quote, Profile, Research, Stock Buzz) agreement to buy Electronic Data Systems Corp (EDS.N: Quote, Profile, Research, Stock Buzz) for an equity value of $13.2 billion.
And the biggest deal in Silicon Valley this year may be yet to come, with Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) and Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz) still giving each other backward glances.
Data from Dealogic shows technology companies globally have announced 1,991 M&A deals in the year to date, a 16 percent increase from the same period last year. But smaller deals mean the total value fell to $94 billion from $105 billion.
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