IT Industry News
March 2014 was not a banner month for acquisitions but there was one big deal with Facebook making a, somewhat surprising, $2 billion acquisition of virtual reality company Oculus VR. Intel also expanded its horizons with the $150 million acquisition of smart watch maker, Basis Science. Some other interesting moves saw a fair bit of investment in “big data” company Cloudera with both Google (as part of an investment consortium) and Intel involved; SAP added to its purchasing software suite with the acquisition of Fieldglass and Telus made a couple of buys, Enode a management consulting company out of Quebec and Med Access an addition, in British Columbia, to their healthcare division. There were a few other smaller deals plus Embarcadero bought the ERwinDate Modelling software from CA. Other than M&A activity, there were a number of companies making news, and not all for good stuff! IBM’s server sale to Lenovo has generated some significant labor troubles in China, Google was ordered to pay $85 million to SimpleAir for patent infringement and NetApp announced it was laying off almost 5% of its workforce representing 600 jobs. A couple of Bitcoin exchanges ran into serious trouble with Mt.Gox "losing" $500 million in bitcoins and Vicurex freezing all of its accounts after a serious hack. Notable "people events" in March saw Target’s CIO Beth Jacob resign in response to the recent major data breach and Symantec fired their CEO Steve Bennett. Economic news was at best “tepid” in Canada, with the unemployment rate unchanged and indicators generally “blah” (that is one of my best economic terms). Indicators in the US however were generally positive with growth in GDP, several confidence indices showing promise and an outlook of increased hiring.
February 2014 saw Facebook make a big move with a $16 billion acquisition of WhatsApp, which is probably good valuation news for Blackberry because its BBM product would be a direct competitor. Blackberry, however, had another rough month when IDC released its numbers as the company’s smartphones accounted for only 1.9% of sales in Q4 of 2013. Another company with big news, although not necessarily positive was Sony. They appear to be reinventing themselves in their various niches as they are closing their eReader store and divesting themselves of their PC division (Vaio). In other M&A news, Comcast is making a $45 billion play for Time Warner Cable; Oracle paid a reputed $400 million for data management platform company Bluekai; LinkedIn paid $120 million for online job search company Bright; and Klout was bought for about $100 million by Lithium Technologies. Google made a couple of acquisitions, online fraud company Spider.io and secure logon company Slicklogin. IBM is buying database as a service company Cloudant; and Monster bought a couple of companies, social profile company Talentbin and job aggregation and distribution technology company Gozaic. Other companies making news this month include Microsoft who announced a new CEO, Satya Nadella (who replaces Steve Ballmer) plus a new Board Chair John Thompson (who replaces Bill Gates). Dell starts its new life as a private company with major restructuring, resulting in likely 15,000 job losses. On the good news front, jobs creation and infrastructure additions in Canada come in the form of new datacenters for Bell Aliant and for Telus. In reports from various sources, Android has about 80% of the mobile OS market share, with Apple a distant second. Samsung was the dominant handset hardware supplier with 32% share, with Apple second. Apple, however, accounted for approximately 1/3 of tablet sales in Western Europe last year, with Samsung second. A Cisco study suggests that users will increase mobile data usage by a factor of approximately 8 over the coming 5 years, so make sure you have good data plans! The Canadian federal Government announced an infrastructure investment to put broadband into rural communities and Gartner tell us that IT spending was flat year over year, for the 13th year in a row! Economic news was generally mixed, with no major bad news and no big breakthroughs. Some job growth in Canada and the US, some positive confidence indicators and some not so good. One study seemed to sum it up: Careerbuilder found that 58% of employers feel the recession is still lingering!January 2014
January 2014 was an interesting month with a few big M&A deals. Google was an especially busy player, selling its Motorola Mobility handset unit to Lenovo for $2.9 billion but paying $3.2 billion for Nest Labs and the company also bought Bitspin. The other big deal saw VMware pay $1.17 billion for mobile device management company AirWatch. Other big names on the acquisition trail included Oracle who bought cloud-based service delivery company Corente; Microsoft paid a reputed $100 million for cloud-based service company (seems to be a theme) Parature; Ricoh purchased IT service company Mindshift from BestBuy; and Hootsuite bought analytics company uberVu. Elsewhere, IBM announced a $1.2 billion investment in adding datacenters, whilst also hinting at upcoming layoffs, anticipated to be in the 5,000 to 8,000 range. Intel also announced layoffs of 5,000 jobs in 2014. Apple released interesting information about the AppStore which generated $10 billion in 2013. The overall theme of surveys and indices suggest a positive outlook towards 2014, with the US looking particularly good. Numerous surveys suggest growth in jobs, positive consumer and CEO confidence plus decent leading indicators. Interesting research from KPMG suggests that UK tech companies are enjoying their fastest growth in a decade, creating opportunity in that sector.December 2013
December 2013 was a short work month given how the dates fell, and that was reflected in the generally slow activity. Also much of the media uses December as a focus on what transpired through the year, rather than specifically December. On the M&A front, Oracle pulled off a $1.5 billion buy of marketing software company Responsys; Akamai paid $370 million for cloud-based security solutions provider Prolexic; JDS Uniphase paid $200 million for enterprise performance management company Network Instruments; IBM bought a "big data" file compression company Aspera and Hitachi expended its solutions capability with the purchase of Calgary-based Ideaca. In other company news, Target, although not an IT company, had a major security breach involving details of 40 million debit and credit cards. Ottawa-based Shopify raised another $22 million in investment and Cisco announced a joint deal with the Province of Ontario that might create another 1,700 jobs over the next six years. There were not a lot of surveys or reports released; however, employment numbers showed a continuing improvement in North America, perhaps a good sign for 2014!November 2013
November 2013 was particularly slow on the M&A front, which is right in line with the Capital Confidence Barometer, a report suggesting that while Canadian executives feel confident about the economy it does not seem to be translating into M&A activity. Perhaps the same can be said for executives around the world? There was, however, SOME activity and it was Canadian “darling” OpenText that paid $1.1 billion for cloud-based integration services company GXS Group. Another Canadian deal saw Mitel buy Aastra for close to $400 million, and the final Candian deal (hardly in the same league) was Eagle’s first acquisition of Valianz, a Montreal based staffing company. Other deals this month included ebay’s $800 million purchase of global payments company Braintree; Apple’s $370 million purchase of 3D sensor company PrimeSense; and Akamai’s purchase of Velocius Networks. Other companies in the news in November include Blackberry, as they attempt to recover via layoffs, a change in CEO, and multiple changes in the executive suite; Acer who are also coping with their shortcomings in a tough PC market, by changes at the top and potential layoffs; and Huawei who are investing $600 million into 5G network research. A survey from the Technology Council of North America raised the concerns about shortages of tech talent while CompTIA tell us IT Security is the top technology priority of CIOs. There were several positive indicators of confidence amongst US workers, and a TEK survey suggests tech leaders are looking to hire in 2014. Canadian unemployment is still down below 7% and Canadian workers are the most content with their jobs according to a Monster survey.October 2013
October 2013 was not a dynamic M&A month, although there was certainly some activity. Oracle announced two acquisitions in October, both "cloud based" companies. The first company is Big Machines, which provides pricing and quote date for sales and orders; and the second is Compendium, a content marketing company. Other "names" out shopping include Avaya buying the software division of ITNavigator for its call centre and social media monitoring software; Rackspace bought ZeroVM, a tech company with a software solution for the cloud; Intuit bought consulting company Level Up Analytics, primarily to acquire its talent; VMWare bought "desktop as a service" company Desktone; Netsuite bought human capital software company TribeHR; and Telus enhanced its mobile offering with the purchase of Public Mobile. There were a few interesting survey results this month. Forrester's survey tells us that less than 40% of companies think their IT shop can deliver projects on time and on budget (probably not a big surprise to anyone in IT). The PC market continues to take a hammering, experiencing its sixth consecutive quarter of contraction! A Fortinet survey suggests that many GenY employees will use their own devices at work despite company policies. It also appears that Canadian government data breaches are on the rise according to a Privacy Commissioner report. On the talent front, an Accenture study suggests 46% of CIOs believe they will face skills gaps in the next couple of years. Meanwhile, Gartner tells us that smart machines will cause significant job losses amongst skilled workers over the next decade. Statistics Canada data shows a positive picture on the unemployment front with employment rising and the unemployment rate dropping to 6.9%. GDP growth in August also exceeded analyst expectations. The US economy suffered from the continuing saga in Washington, with Forrester suggesting the impact on technology spending is about 2% in 2013, reducing anticipated growth in that sector from 5.7% to 3.9%. Not surprisingly, CEO confidence is down and Independent Business optimism is reduced.