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In this Issue: > General Interest > Company News > Merger & Acquisition Activity > Primary Sources |
> GENERAL INTEREST
The US Conference Board’s employment trends index rose 0.3% in September from its revised August reading, but remains down 15.6% from its year-ago reading. The index now stands at 88.5. Things are getting better, but slowly!
Statistics Canada tell us the unemployment rate fell for the first time in nearly a year to 8.4 per cent last month. The September jobs pick-up of 30,600 was five times larger than the economist consensus forecast of 5,000 and – along with a slight decrease in the number of workers looking for jobs – helped drop the national unemployment rate by 0.3 percentage points.
Real gross domestic product in the U.S. decreased at 0.7% in the second quarter, according to the U.S. Department of Commerce. Real GDP fell by 6.4% in the first quarter.
A study commissioned by Robert Half found that 54% of US companies have banned the use of social networking sites such as Twitter, Facebook, MySpace and LinkedIn sites at work. Apparently, the primary concern is loss of worker productivity, but fears over unknown legal and brand exposure may also play a role in this. Another study conducted by Nucleus Research indicated that employees who use social networking sites at work do so up to 2 hours a day. 87% of employees admitted they weren’t using the sites for business, but for personal purposes instead.
Billionaire Raj Rajaratnam, who rode his hedge fund to $7 billion in assets by betting primarily on high technology and health care stocks, was arrested along with five others and charged with insider trading. Many of their trades in high tech stocks were based on illegally obtained information, prosecutors alleged. Rajaratnam, a partner in Galleon Management and a portfolio manager for Galleon Group, was accused of conspiring with the five other defendants to produce more than $20 million in profits by receiving insider information on several companies including Akamai Technologies, AMD, Google, IBM, Polycom and Sun Microsystems.
The Monster employment index fell two points in September to a reading of 119 after having risen seven points in August. Monster suggest that “. U.S. employers continue to exhibit caution when it comes to hiring,”
Spherion’s employee confidence index posted little change in September — falling to a reading of 49.4, down 0.5 of a point from August. The number of U.S. workers who believe the economy is getting stronger rose to 27% in September, up three percentage points from August, according to the index’s survey. However, fewer were confident in their abilities to find new jobs — falling to 38% in September from 40% in August.
Quarterly reporting in the staffing industry once again demonstrated the affect the economy has had on this sector in the last year . Randstad revenue down 28.2% on the same period last year. Spherion reported third-quarter revenue fell 22.5% from the year-ago quarter. Third-quarter revenue at MPS Group fell 29.4%. CDI Corp. reported third-quarter revenue fell 20.6%.
Federal IT budgets will grow more slowly over the next several years, according to a new report by TechAmerica. The tech industry association expects civilian agency IT budgets to grow 3.4% over the next five years, significantly less than the 8.3% rate from 2005 to 2010.
Some “identity theft” concerns back in the press. The theft of a laptop belonging to an employee of the Blue Cross and Blue Shield Association (BCBSA), was stolen from a car in late August, according to reports in the Boston Globe and the Chicago Tribune. It contained a database listing the business and personal information of about 800,000 doctors. The State of Virginia revealed that an unencrypted flash drive containing personal information on more than 100,000 adult education students has been lost.
> COMPANY NEWS
A report from IDC indicates that Acer overtook Dell as the world’s second-largest computer vendor during the third quarter. Acer benefited from strong shipments during the back-to-school season, as prices for laptops fell and netbook shipments gained momentum. Dell has not embraced low-cost netbooks as enthusiastically as Acer. Acer benefited more from the competitive pricing environment for laptops and netbooks. HP is the top selling PC Vendor, Lenovo is 4th with Toshiba the 5th largest.
Dell was having a bad month . also hitting the press with news that next year it will close its desktop computer manufacturing plant in Winston-Salem, North Carolina, as the company tightens costs in a difficult market.
Ethernet switch vendor Extreme Networks is replacing its CEO and laying off 70 employees in an effort to quickly improve the company’s bottom line and set it up to run profitably with lower revenues.
Former AMD CEO Hector Ruiz allegedly shared confidential information with a Wall Street trader connected to an insider-trading scandal. A criminal case filed by the U.S. Securities and Exchange Commission alleges that an AMD executive shared confidential information about the company’s reorganization in 2008 with a Wall Street executive.
> MERGER & ACQUISITION ACTIVITY
MTS Allstream has bought a Quebec-based Cisco System integrator to increase is ability to deliver network and unified communications solutions to customers. The Winnipeg-based telco bought VisionIP Technologies of Montreal for an undisclosed price. The deal adds to MTS Allstream’s ability to deliver CISCO services, particularly in Quebec where it had previously struggled.
Cisco has signed an agreement to buy videoconferencing vendor Tandberg for about US$3.0 billion in cash. Tandberg’s video endpoints and network infrastructure products will be integrated into Cisco’s collaboration products. Cisco has high hopes for what the combination of the two companies will be able to accomplish in terms of expanding the whole videoconferencing market, according to Cisco CEO John Chambers, who spoke to investors and reporters on a conference call.
Aiming to expand its mobile Internet offerings, Cisco is buying Starent Networks for US$2.9 billion. Starent, based in Tewksbury, Mass., makes IP-based infrastructure technology designed to help carriers scale up their mobile networks. Starent’s technology is used in CDMA2000, UMTS/HSPA and WiMax networks.
In a deal that underscores the shift toward cloud computing, Cisco is paying about $183 million for ScanSafe, a privately-held provider of software-as-a-service (SaaS) Web security for businesses. Tom Gillis, VP and general manager of Cisco’s security technology business unit, who arrived at Cisco via its 2007 acquisition of IronPort, described the purchase as part of Cisco’s effort “to build a borderless network security architecture that combines network and cloud-based services for advanced security enforcement.” The Web security market, which Cisco expects to grow to $2.3 billion by 2012, appears to be in the midst of consolidation. Earlier this month, Barracuda Networks, a maker of security hardware, acquired SaaS Web security provider Purewire for an undisclosed sum. Cisco said it intends to combine its IronPort Web security appliance with ScanSafe’s Web security service to offer on-premises, hosted, and hybrid-hosted Web security. The company also expects to integrate ScanSafe’s service with Cisco’s AnyConnect VPN Client to enhance security for mobile workers. The acquisition is Cisco’s sixth this year and its first security-related purchase since 2007. That year, in addition to IronPort, Cisco purchased two other security-related companies: BroadWare Technologies and Securent.
Adecco has bought MPS Group for 782 million Euro, or about US$1.15Billion. The acquisition will significantly enhance Adecco’s position in the professional staffing business, particularly in the USA, Canada and the UK. MPS Group provides specialty staffing, consulting, and business solutions across various professional business lines such as information technology (Modis, Idea Integration), finance and accounting (Accounting Principals and UK-based Badenoch & Clark), legal (Special Counsel), engineering (Entegee) and healthcare (Soliant Health). Acquiring MPS Group enhances Adecco’s Managed Service Program (MSP) and Recruitment Process Outsourcing (RPO) offering through MPS Group’s technology platform (Beeline). Together, both companies will become a leading provider of MSP and RPO services and technology solutions. Adecco expects to achieve 25 million Euro of annual synergies from the integration of MPS Group within two years, representing approximately 0.5% of the pro-forma 2008 revenues of the USA, Canada and the UK. Integration costs are expected to amount to approximately one times the annual synergies.
Oracle has announced it is acquiring the assets of HyperRoll, a financial reporting acceleration software firm. No price was disclosed for the privately held, Mountain View, Calif., company. The deal is expected to close by the end of the year. HyperRoll’s Data Performance Management Suite speeds up the reporting of financial results. It can draw data out of all major databases, including Oracle, IBM’s DB2, Microsoft’s SQL Server, Teradata, and Sybase. It produces specific products that pull data from business intelligence systems Business Objects, MicroStrategy, Cognos, and other OLAP systems. These products can help tighten the close cycle in calculating financial results and improve visibility of financial data to line-of-business managers.
AT&T acquired VeriSign’s security consulting unit for an undisclosed amount, and the telecommunications company said the deal will enable it to boost its network-based cybersecurity offerings for corporate customers. VeriSign said the Global Security Consulting Services business worked with Fortune 500 companies to help them navigate regulations, understand corporate security requirements, identify vulnerabilities, meet industry compliance standards, and defend and respond to corporate attacks. AT&T will integrate the unit into its security team, and it is expected to augment the company’s multi-layered network security offerings. Enterprise security is becoming more complex as companies combine video, voice, and data onto a single network. The deal may help AT&T capitalize on this field, and research firm IDC estimates the annual market for U.S. IT security services is $11.7 billion, with the security consulting business alone being worth about $3.6 billion a year. “The combined capabilities of VeriSign’s security consulting business with AT&T’s global reach, networking, and security portfolio will broaden our consulting and risk analysis expertise, and enable us to more quickly develop and bring to market capabilities to address the evolving security needs of businesses around the world,” said Ron Spears, CEO of AT&T’s business solutions unit, in a statement.
In a move likely to improve energy efficiency options in data centers, industrial equipment maker Emerson Electric Co. is set to acquire IT solutions provider Avocent Corp. for $1.2 billion. Both companies already have substantial representation in IT data centers and the acquisition will help Emerson to offer total infrastructure management solutions to its data center customers. Nearly 50% of Avocent’s customers are located outside the U.S. The Huntsville, Alabama, IT firm had sales of $657 million in 2008 while Emerson, headquartered in St. Louis, recorded sales of nearly $25 billion. Emerson’s Network Power unit provides several solutions to data centers ranging from power systems, energy management and precision cooling. Avocent’s unified platform delivers a mix of hardware, software and embedded technologies for monitoring, managing and problem-solving in data centers. Emerson’s data center-related revenues were about $2.6 billion in fiscal 2008.
Sprint Nextel reported that it has reached an agreement to acquire its iPCS affiliate in a deal valued at $831 million. The agreement ends lengthy litigation between the two firms in which iPCS sought to block or retard Sprint’s WiMax and iDEN networks in the Midwest markets where iPCS operates. Both firms hailed the deal, with Sprint stating it expects to obtain $30 million in “synergies annually,” and iPCS calling the agreement “a very attractive price.” Sprint said the acquisition should be free cash flow accretive in 2010. Following a court ruling months ago, Sprint had been planning to divest some former Nextel iDEN network assets. With the Monday agreement, Sprint said it will no longer be required to divest the iDEN network in IPCS territories.
Siemens AG is making another big investment in solar power, as the engineering conglomerate agreed to purchase Solel Solar Systems for about $418 million. Solel operates solar thermal fields for producing electricity, and it also sells solar receivers and constructs solar fields. The company posted nearly $90 million in revenue in the first half of the year, and Siemens reportedly outbid Alstom and Areva to acquire Solel. The deal could eventually enable Siemens to offer the key components for trough power plants because it already provides steam turbine engines for solar thermal plants. The deal is expected to close by the end of the year. Siemens said it expects the solar energy market to grow by more than 20% per year, and it has been investing accordingly. The company purchased 28% of Archimede Solar Energy in March, and also recently invested about $15 million in the solar energy company Arava Power. The move comes as other sectors of Siemens’ portfolio are not performing well due to the global economic recession. The company’s joint venture with Nokia, Nokia Siemens Networks, has been struggling, and it was a drain on Nokia’s bottom line for the third quarter. The world’s largest cell phone maker wrote down the value of the wireless networks venture by $1.35 billion.
BearingPoint China Consulting’s operations are to be acquired by Perot Systems, which, in turn, is being acquired by Dell. The deal will beef up the IT services operations of both Perot Systems and Dell in China, particularly in Shanghai and Beijing where BearingPoint has long had offices. The BearingPoint deal closely follows the announcement that Dell plans to acquire Perot Systems for $3.9 billion. Financial terms were not disclosed for Perot Systems’ purchase of BearingPoint China Consulting, which had $35 million in revenue last year. BearingPoint’s main corporate entity, BearingPoint Inc., filed for bankruptcy protection earlier this year and has been selling off various units piecemeal. BearingPoint China Consulting was established in 2001 and has specialized in providing consultancy expertise to Chinese businesses engaged in energy, automotive, insurance, and financial services. Noting that it previously announced key contracts in China’s healthcare and manufacturing sectors, Perot Systems said the BearingPoint China Consulting operations will be merged with Perot Systems’ Commercial Solutions business unit. In December 2008, BearingPoint’s Chinese operations ranked 11th in Information Week’s compilation of China’s IT companies.
Tibco has acquired privately held DataSynapse for $27.7 million in a bid to boost its role in cloud computing. Tibco is a middleware supplier to financial services and other firms that is seeking to move into application management in the cloud. About $13 million of the total was paid to satisfy DataSynapse debt obligations, according to its 8K statement on the purchase filed Aug. 24 with the SEC. Tibco said the firm is in a quiet period after filing its 8K form with the SEC Aug. 24 and would not comment further at this time. DataSynapse is an eight-year-old supplier of software for providing a set of common services to applications running on a server cluster. DataSynapse’s GridServer, for example, could distribute, monitor and manage multiple application workloads over a cluster. More recently, DataSynapse had announced that its products support Amazon Web Services and had an automated a self service capability.
> PRIMARY SOURCES:
IT World Canada – http://www.itworldcanada.com
Ottawa Business Journal – http://www.ottawabusinessjournal.com
ZDNet – http://www.zdnet.com
Information Week – http://www.informationweek.com
