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Report: Tech deals tumble slightly in quarter

Proposed technology mergers and acquisitions deals slip in first quarter, but looks can be deceiving: Microsoft's Yahoo bid accounted for half the total, according to The 451 Group.

When it comes to technology-related mergers and acquisitions in the first quarter, think "still waters run deep."

According to a first quarter M&A spending report released Friday by The 451 Group, proposed technology deals totaled $92 billion in the three-month period for 778 deals, down a notch from $100 billion in the same period a year ago for 1,059 transactions.

But keep in mind, and rightly so, Microsoft's initial blockbuster $44.6 billion buyout bid for Yahoo, accounts for nearly half of the technology M&A deals proposed in the quarter.

"Although Microsoft had few reservations in pushing forward the largest deal in its history, other big-ticket purchases were put on hold in the first few months of 2008," according to the report.

Chew on this stat: 11 proposed deals worth $1 billion or more logged in during the quarter--down by nearly half from a year ago.

"We would hang the decline in (billion-dollar) deals on the turmoil in the credit market, which has obviously knocked buyout shops from the market, as well as knocking the equity value of many companies into a tailspin," according to the report.

Leveraged buyout firms took the greatest hit, seeing the value of their transactions fall to $6 billion for 35 deals in the quarter--about half of the $11.5 billion for 28 deals a year ago, according to the report.

"As the subprime mortgage crisis began ripping through financial institutions, the days of cheap and easy debt came to an abrupt end," according to the report.

Companies looking to snap up other businesses, meanwhile, saw only a slight dip, of less than 3.4 percent, to $86 billion in the quarter, compared with a year ago.

And the Microsoft-Yahoo proposed deal falls into that camp.