It's not just the number and value of the deals that's striking - it's the boldness of the deals,'' says Greg Rossman, a principal at Broadview. Industry watchers attribute the feeding frenzy to several factors. Despite some rocky moments for technology stocks during 1997, most of the leading companies' stock valuations were high, giving the firms plenty of money with which to play. Take Microsoft Corp., for instance. Microsoft splurged last year to buy companies in the messaging, security and multimedia product markets.
Fierce competition is a big driver, as well.
Start-ups have come to recognize how difficult it is to go it alone, resulting in far fewer initial public offerings last year. Only 134 venture-backed firms went public in 1997, roughly half the number that went public the year before, according to Securities Data. In the mature datacom market, distribution is controlled by the big players,'' he says. A private com- pany may have great technology but may not be able to reach enough of the market.'' For customers, the acquisition activity is a mixed blessing. The bigger companies tend to have stronger service and support staffs and a better variety of products and services.