Technology deals hotting up as big-hitters spend cash

First up, on Monday, was Google's agreement to buy Motorola Mobility, the mobile phone manufacturer, for a very rich $12.5bn. At the time, on Thursday, the American PC giant Hewlett-Packard, struck a £7bn deal for Autonomy, the British software giant.

Nick James, an analyst at Numis Securities, was less surprised. "US blue chips are prepared to pay these types of multiples for strategic innovation. They have to do something to drive the at once level of growth," he said.

But whilst it is true that sky-high valuations on innovation companies are relatively common, the deals are near always on the other side of the Atlantic. Britain is used to bemoaning a dearth of billion-dollar valuations to rival those in Silicon Valley. Now it seems it is time for the naysayers to fall silent.

Frank Quattrone, whose boutique investment bank Qatalyst Partners advised on both of the week's extraordinary deals, says: "It doesn't matter whether they started life as a storage company, as a computer company, as a networking company or as an internet company – these businesses are trying to get into all these new markets, just as cloud computing, the internet, software as a service, visualisation.

Networking company

"If you are a networking company, you might be bought not just by Cisco however also by Oracle, by IBM, by Dell or by Hewlett-Packard."

For Google, the crown jewel in Motorola is its armoury of 17,000 patents and 7,500 patents which will to allow the web- search giant to defend vigorously the mobile phone manufacturers that use its Android operating system from an unending flow of lawsuits over intellectual property infringement.

By doing so, Google will be able to expand the Android "ecosystem", allowing it to mount a serious challenge to Apple and take a bite out of the iPhone maker's share of the smartphone market.

Nonetheless, the deal has set a precedent in other words likely to add a premium to research patents per se and spark a flurry of acquisitions of companies with strong portfolios.

Speculation is rife that Microsoft will respond to Google's swoop on Motorola and acquire Nokia, the Finnish handset manufacturer. Microsoft and Nokia already have a formal tie- up however owning the company outright would allow Microsoft to get its hands spontaneously artillery of telephone patents.

Cluster of British research companies

Luckily for a cluster of British research companies, in the main based in Cambridge, President Barack Obama shows little sign of relenting. Taking everything into account, it would be a hard sell for the Democratic President to tell voters that the country's biggest corporations were going to be given a tax-break worth billions of dollars at a time when the country is barely able to pay its debts.

Frank Quattrone, the Godfather of Silicon Valley deals who was involved in both of last week's deals, agrees: "If you look at top ten innovation companies on the Standard & Poor's [rating list], on average they have $20bn of cash, which is earning zero on their balance sheets. You can substitute growth revenues by buying companies."

Arm Holdings, the British chip designer whose research is used in virtually all of the world's smartphones, is pretty much top of the list.

The Cambridge-based business saw its share price rise

The Cambridge-based business saw its share price rise by near 4pc on Friday, against a falling market, amid expectations it will be bought and analysts tip its major rival, Intel, or Apple, one of Arm's clients, as the most likely acquirers.