(FORTUNE Magazine) – AFTER SHUNNING BIG DEALS FOR more than three years, corporate America has suddenly launched a new merger wave that marks not a tentative comeback but what looks like the start of a swaggering, full-fledged frenzy. From November through January, U.S. companies announced 48 deals of $1 billion or more, totaling an astounding $357 billion. That's the best three-month period since the fall of 2000 and rivals the pace reached at the height of the bull market. Buyers are emboldened because the stock they like to use as currency in takeovers is surging in value. But the biggest change is the new welcoming attitude of sellers toward taking those shares. For years corporate boards were extremely reluctant to accept a buyer's stock in big mergers, because in so many deals--think AOL/Time Warner and Conseco/GreenTree--the acquirer's shares collapsed (Time Warner is FORTUNE's parent company). But now sellers are "once again optimistic about the acquirers' stock and what their business will do for it," says Mark Sirower, chief of the M&A strategy practice at PricewaterhouseCoopers. "That isn't necessarily accurate. But it's certainly optimistic."

Despite the surge in animal spirits, today's merger craze is most likely to have the same results as in the past: For shareholders, big deals typically produce about twice as many losers as winners. At first blush this raft of deals looks different, mostly because a majority of buyers are paying small to medium premiums over the target's market value compared with the 30-year average of about 30%. SBC is offering no premium at all for AT&T, while the markups for Sprint's $35 billion purchase of Nextel and Johnson & Johnson's $25.4 billion bid for Guidant are relatively modest at less than 10%.

But premiums represent only part of the picture in handicapping the success of a merger. To ensure that a deal improves its stock's performance, a buyer must first raise earnings fast enough to justify the value the market was already placing on the target before the deal was announced--as we'll see, a big challenge in itself. Second, it must generate sufficient synergies--by cutting jobs, combining computer systems, or selling more products to the same customers--to pay for the premium. When the premium is low, the two companies don't need an epic, often unreachable, improvement in performance to pay for the markup. But to make the deal at least a breakeven proposition for their investors, they still have an important hurdle to surmount: integrating the business and cultures, often taking large restructuring charges, and still producing the earnings from the target's business that Wall Street was already expecting. To make the deal a success, they must increase profits even faster than the pace the market was anticipating.

Right now, "the price/earnings multiples of many of the targets are high, meaning that the market is expecting fast profit growth," says Karl Pichler of financial consulting firm Stern Stewart & Co. If that growth doesn't materialize, the deal will be a drag on the buyer's P/E and stock price. FORTUNE asked Stern Stewart to measure how much today's big buyers would have to raise the after-tax operating profits in their newly acquired businesses over the next five years to match the market's expectations and repay the premium. Stern Stewart examined five of the biggest deals since December, and in three of them, the hurdles are daunting.

Let's start with P&G's much-praised $57 billion deal to purchase Gillette. P&G is paying a moderate premium of around 13%, or $8 billion. The problem is that Gillette's shares were already extremely pricey, selling at a 28 P/E. So Stern Stewart estimates that P&G must raise the profits from Gillette's razor, battery, and other businesses by $1.3 billion, or over 70%, by 2010. That would require annual profit growth of 12% a year. It's possible, but no gimme: On average, Gillette's operating profits have risen for the past five years at one-third that rate (see our A.G. Lafley interview).

The J&J/Guidant deal faces hurdles that are almost as high. Guidant is boasting a P/E of 31. To make the deal work, J&J will need to increase operating earnings from Guidant's stents, catheters, and other medical devices by $422 million, or 57%, in five years--about 10% a year. Guidant's operating profits have risen an average of 8% a year over the past five years.

Facing the steepest climb is software-provider Symantec, which recently bid $13 billion for Veritas. Besides offering a staggering premium, Symantec is buying a company that already had a P/E approaching 30. So Symantec must raise operating earnings from Veritas's products from around $350 million today to $1 billion. That would require an incredible growth rate of 24% a year.

Surprisingly, the two deals facing the lowest hurdles lie in an arena where failed deals abound: telecom. They're Sprint's merger with Nextel and SBC's acquisition of AT&T. Nextel shares were relatively cheap at ten times earnings, and Sprint is paying a tiny premium. So all Sprint has to do is raise the earnings from Nextel's businesses by 7% a year to satisfy shareholders. With AT&T, the bar is even lower. If SBC simply keeps AT&T's earnings right where they are now, at around $1.8 billion a year, the deal will give shareholders an average return, and any significant improvement will make the deal a winner. Too bad the same can't be said for the majority of other deals. A bull market in optimism doesn't change the numbers.