IT Industry News
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 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.September 2013
September 2013 saw a number of companies struggling. Blackberry announced a quarterly loss of almost $1 million, laid off 4,500 people and after failed attempts at recovery is being taken private by its largest shareholder. HP was dropped from the Dow Jones Industrial Average, reflecting its challenges in recent years. HTC is struggling for relevance in the tough smartphone market place and Siemens announced layoffs of 15,000 people as it struggles to contain costs. It wasn't all doom and gloom, with IBM announcing a $1 billion investment in its Linux business, Twitter tweeting that it would be going ahead with an IPO and Apple getting the best customer satisfaction score amongst major PC manufacturers. There were some very positive indicators in the various employment reports, surveys and indices this month. Employment was up last month in both the US and Canada, there are signs of more hiring in many sectors and surveys showed optimism from Canadian CPAs, mid-market executives and North American employees. On the M&A front, the biggest deal saw Microsoft get into the phone making business, buying Nokia's devices and services unit for more than $7 billion. The other big deal, as already mentioned, sees Fairfax Financial Holdings, currently Blackberry's largest shareholder, offer $4.7 billion to take the company private. Ebay is paying $800 million for payment platform Braintree; Synnex is buying IBM's customer care division for $505 million; Rogers is adding to its data centre capacity with the $161 million purchase of Pivot Data Centres; Extreme Networks is buying Entersys Networks for $180 million; and Manitoba Telephone Systems is using some its cash from the Allstream sale to buy Epic Information Systems.August 2013
August 2013 saw some interesting activity from a number of players. At a time when employee engagement is considered critical, it was disheartening to see Cisco announce record profits and lay off 4,000 people at the same time. Another company laying off was Blackberry which laid off another 100 employees this month while announcing it is looking at alternatives, including selling the company. Steve Ballmer announced that he will retire as CEO of Microsoft this year and Jeff Bezos, CEO and founder of Amazon, bought the Washington Post, which will be an interesting development to follow. On the M&A front IBM reputedly paid $1 billion for Trusteer, a cybersecurity company specialized in the financial services sector; Qualcomm sold its fleet management software unit for $800 million to private equity firm Vista Equity Partners; and the other big dollar buy was AOL, paying $405 million for online video company Adap.tv. Facebook bought speech recognition company Mobile Technology; Google bought patents to support its Glass product from Foxconn; Software AG bought analytics firm Jackbe; Opentext paid $33 million for cloud based software company Cordys; and SAP bought ecommerce company Hybris. PC sales are taking a hammering from tablets and for the first time smartphones are outselling “feature phones”. Speaking of smartphones, Android continues to take more market share and Apple’s share is sliding. There were a number of reasonable economic indicators including Canadian GDP growth, and various economic indicators showing positive signs although the Canadian unemployment rate edged up a notch.July 2013
While the M&A activity was not extensive, there was some interesting activity in July 2013, with the big deal involving perennial acquirer Cisco shelling out $2.7 billion for security vendor Sourcefire. There were some other big names out shopping, with EMC buying identity management company Aveska, Intel making an acquisition in Israel (a trend) of Omek, a company specialised in the perceptual computing arena. Apple bought Locationary, a Toronto company that is expected to be involved in improving Apple's maps for iOS (remember when Apple dropped Google Maps!) Finally, Ottawa’s Shopify bought a Toronto-based design agency Jet Cooper. In other news, Blackberry continues to battle, announcing 250 layoffs in its “new product testing” department. Samsung appears to be the big winner in the latest quarterly report on mobile phones, with Apple slipping a little. On the PC front, Lenovo and, to a lesser extent, Dell appear to be the “winners” amongst the PC manufacturers. Generally, there appeared to be a lot of good news coming from the various North American surveys and reports. Job growth is expected in the second half of the year, GDP numbers were decent, unemployment numbers are not bad and sentiment among CEOs and workers appears positive. I can’t remember the last time that so many indicators were positive - let’s all keep that positivity going!June 2013
June 2013 saw Salesforce.com's $2.5 billion purchase of marketing technology company ExactTarget as the big buy of the month. Other acquisitions saw Irish mobile company Three pay $780 million for O2 Ireland; SanDisk paid $307 million for SMART Storage Systems; Cisco bought Composite Software for $180 million; IBM bought cloud company SoftLayer Technologies; and Buytopia.ca has been on a spree with six acquisitions in the last year. There was news of layoffs at struggling social networking games company Zynga with 500 people losing their jobs, Symantec are apparently letting go of 1,700 people and IBM is letting 1,300 staff go. Some interesting surveys, reports and tidbits in the news suggest three quarters of executives around the world would be willing to change jobs today, another report out of the US says that 55% of workers are interested in changing careers. About 70% of Canadian companies have suffered some kind of cyber attack in the last year - it is getting crazy out there! Generally the indicators were positive in both the US and Canada with expectations of improvement in the economy, good news on the jobs front and an optimism amongst business owners. Last but not least is an interesting report from BMO suggesting that Montreal will add 90,000 jobs over the next three years.