NEW YORK (CNN/Money) - Break out the champagne. Call the caterer. Put on that late-1990s era black turtleneck that's been languishing in the bottom drawer. (Still fits!) Tech mergers are back, baby!

Yes, they were doing conga lines on the trading floor Friday morning on word that Oracle, the killer whale of enterprise software, had launched an unsolicited, all cash offer for its smaller rival, PeopleSoft. Coming fast on the heels of Palm's agreement Wednesday to acquire Handspring and PeopleSoft's agreement to buy J.D. Edwards, it appears that the long drought in tech M&A is over.

Excuse us while we take another lap around the office.

PeopleSoft's shares leapt on word of the bid, which carries a price tag of $16 a share, or about $5.1 billion. A half hour after the news first crossed, its stock was trading up $3.79, or 25.1 percent to $18.90. The market was sending a clear message to Oracle: You lowballed the bid. Which is funny, in a way, since Thursday the market thought PeopleSoft was worth just $15.11.

Meanwhile, Oracle shares pushed higher on the deal, too, rising 1 percent. That's not the way it's supposed to work -- acquirer's shares typically decline. Traders took Oracle's message that PeopleSoft was worth more than it was trading at to mean that the whole industry was undervalued.

And they further took it to mean that tech in general could see a wave of M&A, at much higher levels. Nasdaq futures shot higher as soon as word of the deal crossed, first because traders reckon that takeouts will come at higher prices, but also because the worst thing in the world for someone who has sold a company short is for it to be taken over. Many of the companies that tech bears hoped would go all the way to zero seem to have far greater chances of survival now.

Could a merger wave happen? Absolutely. The tech investing boom spawned far more companies than the world needs. Many are still with us and they are all locked into cutthroat competition for far less business than people envisioned back in the late 1990s. Some sort of consolidation is necessary.

Tech CEOs, being CEOs, are all hoping to be one of the big fish left in the pond. They are nervous that, through mergers, their rivals will become much bigger. So they are itching to move first.

Should they? Professionally speaking, yes. Who wants be relegated to boring your relatives with stories about how you used to be a Silicon Valley player at some back table at Nepenthe? And clearly, that's where some tech heads are headed. The industry strains with far too much excess -- according to the Federal Reserve, tech companies are operating at just 62 percent of full capacity.

But the real question for investors is whether a merger wave will take out all of this excess capacity. If it does -- if acquiring companies are quick to trim the fat -- then tech may be able to really grow again. But if all that happens is that a too many companies turn into fewer bloated ones, then tech M&A will be good for investment bankers, but nobody else.