IT industry back to bubble days

Ggb_in_soap_bubble_1The IT industry seems to be back to the heady days of 2000, according to beancounters at EY (Ernst & Young).

EY counted 3,512 mergers or acquisitions in the tech sector in 2014, for a total value of $237.6 billion, the highest figure since 2000. The report said the outlook for deals in 2015 remains “robust”.

This time the deal making is mobile tech, security and cloud computing. Startups like Uber and Snapchat meanwhile have seen their values soar with new capital inflows.

Last year 38 tech companies entered the billion-dollar club last year, including 25 in the US.

The consultancy PwC said 2014 was the “best year of the decade for global technology IPOs.”

The only thing which has not touched its March 2000 highs is the Nasdaq stock index in New York City, which is seen as an indicator of the tech sector.

There are also some concerned that some of the deals are overvalued – such as Facebook’s $22 billion deal to buy the messaging service WhatsApp.

The EY report says insists that this time, values are grounded in reality as if people expect a bubble to burst later on.

“Unlike 2000, it was no bubble,” the report said. “Despite the occasional ‘moonshot’ from a handful of deep-pocketed buyers, the vast majority of deals were measured in reality-based multiples of good-old-fashioned revenue, profit or cash flow.”