Entrepreneurs, analysts and venture capitalists have mixed views on the strength of the pick-up in the technology sector and its sustainability, writes  Colm Keena

The news this week that a relatively unknown Dublin software company had been sold for a likely price of $100 million (€83.3 million) was like a flashback to the tech boom of the late 1990s.

The impression was all the greater given that Eontec had suffered serious losses in recent years and was only this year expected to sneak back into the black.

However, entrepreneurs, analysts and venture capitalists have mixed views as to the strength of the pick-up in the technology sector and its sustainability. In many ways this reflects the international picture - in the US the Nasdaq 100 index of big tech companies surged by 49 per cent last year, but has stagnated this year and is down 1.2 per cent since January as investors ask whether momentum can be maintained. In turn this partly reflects uncertainty about the overall pace of US recovery.

However, the dog days when venture capitalists would go nowhere near the sector and corporate activity collapsed are clearly over, as demonstrated by the Eontec deal.

Eontec, a banking software company, was bought by Siebel Systems, a US multinational that has an operation in the Galway Business Park. The price is $70 million in cash immediately with an earn-out possibility of up to $60 million over the coming year. The target earn-out is $30 million, making for a likely total price of $100 million.

The sale fits neatly into one venture capitalist's view as to the type of companies that are most primed to benefit from the current uplift in the technology sector. Eontec, founded in 1994, managed to survive the downturn of recent years and had reduced its cost base, said the venture capitalist, who did not wish to be named. Furthermore it is the sort of software firm that would be attractive to businesses wishing to invest in software that allows them do what they do more quickly or efficiently.

"The last three years have seen a focus on the benefits of software to the user, software that can do things quicker, cheaper, faster. People backed off other areas, software that wouldn't be as useful or necessary."

Furthermore, software for the insurance and finance sectors are, he said, among the products particularly in demand. Other popular products are employee-monitoring software such as that developed by Performix, which raised €10 million this week, and the tools used for developing software.

When the tech boom collapsed the venture capitalists ran for cover and smaller firms and start-ups have been through a hard patch. "They [venture capitalists\] all sat on their hands. Now they are starting to come back." The source, is critical of the Irish banking sector, which, he says, is generally unsupportive of start-up technology companies. "They should get more stick," he said.

He believes the technology sector is now improving at the sort of attractive, reasonable rate that is sustainable. "We don't need the mad sessions that we had before." He believes it will be another year or more before telecoms companies begin to come back from the battering they have received in recent years.

Entrepreneur Paul Kavanagh, who is a member of the board of the Digital Hub Development Agency and a shareholder in a number of technology companies, said the tech sector that is re-emerging is different to the one that went "belly up" a few years ago.

He mentioned areas such as wireless technology and biotechnology. The Digital Hub in Dublin, he said, is "taking off", with 27 operations located there, eight more trying to get in, and two trying to expand.

He is involved with one company rolling out a broadband wireless network in Spain. This sort of service is now becoming more feasible because the technology needed by the end-user is becoming more affordable, he said. A US company he is involved in, Lionbridge Technologies, has seen its Nasdaq share price bounce back tenfold in the past two years. The company has offices in a number of locations including Ballina, Co Mayo. He said the near future will see the company creating lower-skilled jobs in India and higher-grade jobs in Ballina, the sort of phenomenon the Irish tech sector is likely to see much of in the coming period.

A spokesman for IDA Ireland says it sees recovery in the computer and internet sector, but says this is not matched in the telecoms sector, particularly hard- hit in the downturn "The computer side is showing every sign of being into recovery now. A number of the larger companies are again starting to talk to us about investment, after a few years of abeyance."

"There are signs of recovery, but the evidence is flimsy." He said the IDA would prefer to see more "hard money" put into investment before becoming bullish. Wireless computer-to-computer technologies are driving some of the growth. Also companies are finding their computers are simply out of date and need to be replaced, and that is creating activity, he said.

He said Irish software companies that have come through the difficult years are now in a very strong position and that Ireland is now the "software centre of Europe, if not the world". It is the only industrial sector where there are equal numbers employed in Irish and foreign companies.

Tech is coming back, it seems, even if businesses and investors alike remain mindful of the costly experiences of recent years.