Our Outlook for the Software Sector
A software acquisition spree is set to continue, for good reasons.
Acquisitions in the software industry are nothing new. However, during the second quarter it seemed that the private-equity-fueled merger mania in the broader markets accelerated the pace of software deals. Several acquisitions were strategic, meant to use the acquired firm's technology or positioning to leverage an existing portfolio. For instance, Morningstar analyst Toan Tran wrote that Microsoft's (MSFT) recent purchase of aQuantive was part of the larger firm's strategy "to extend the platform to offer functionality for advertisers across Microsoft's existing properties (such as MSN and Xbox Live), emerging businesses (like MSN Video and IPTV), as well as the Internet as a whole." Similarly, CheckFree (CKFR) bought Carreker, adding that firm's topnotch payments-consulting and advisory services to CheckFree's first-class payments platform.
Mike Taggart does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.