 |
In this Issue: > General Interest |
> GENERAL INTEREST
General
Companies plan to invest more in information technology systems in 2012 than in any other area, according to a new Robert Half Management Resources survey. Thirty-fice percent of CFOs participating in the survey said their companies would invest in new or upgraded IT systems. The second-most common investment will be the development of new products and service lines, at 21%.
The Economy – Canada
Statistics Canada reported little change in employment numbers for the second consecutive month in August and the unemployment rate edged up 0.1 percentage points to 7.3%. In the past 12 months, employment has grown by 1.3% (+223,000), primarily in Ontario and Alberta, and among private sector employees. Over this period, full-time employment increased 2.2% (+300,000), part-time work declined 2.3% (-77,000) and total actual hours worked rose by 2.6%. Employment increased in Nova Scotia in August, while it declined in Newfoundland and Labrador and Saskatchewan.
The economy – US
U.S. Bureau of Labor Statistics reported that the US gained 4,700 temporary help jobs in August. But as employment rose in some sectors and fell in others, the U.S. ended the month with no new jobs overall, according to seasonally adjusted numbers. The national jobless rate of 9.1% in August was unchanged from July.
The ECRI weekly leading index of the U.S. economy fell to a reading of 122.5 in the week ended Aug. 26 from 122.7 in the previous week. The index’s growth rate was -4.3 percent in the week ended Aug. 26, compared with -2.1 percent in the previous week. The growth rate is based on a four-week moving average of the weekly leading index level, compared with the previous year’s moving average.
The US Conference Board’s leading economic index (LEI) rose 0.3 percent in August to 116.2 (2004 = 100). The index rose 0.6 percent in July, and 0.3 percent in June. “The August increase in the U.S. LEI was driven by components measuring financial and monetary conditions which offset substantially weaker components measuring expectations,” said Ataman Ozyildirim, economist at The Conference Board.
U.S. real GDP rose at an annual rate of 1.3% in the second quarter of 2011, according to the U.S. Bureau of Economic Analysis. Real GDP grew at 0.4 percent in the first quarter. The acceleration in real GDP in the second quarter primarily reflected a deceleration in imports. An upturn in federal government spending also contributed, as did an acceleration in nonresidential fixed investment.
Employee confidence dropped 6.8 points in August, its third monthly decline, according to survey results from SFN Group Inc. The employee confidence index stands at 41.0, its lowest since February 2009. The index, which measures workers’ confidence in their personal employment situation and optimism in the economic environment, revealed continued deterioration in workers’ confidence in the strength of the economy and the future of their current employers.
The Economy – Outside North America
Economic growth in the European Union (EU) is slowing down. After growing strongly in the first quarter of 2011, GDP expanded less in the second quarter. GDP growth is now expected to remain subdued in the second half of the year, coming close to standstill at year-end, according to the latest EU Interim Forecast, published by the European Commission (EC).
The average unemployment rate in France, excluding the overseas dominions, was down by -0.2 percentage points in Q2 2011 to 9.1% or down to 2.6 million individuals when compared with Q2 2010, according to the latest data published by the National Institute of Statistics and Economic Research.
The number of persons employed increased by +0.2% in the entire European Union in the second quarter of 2011 compared with the previous quarter, according to the Statistical Office of the European Union.
The UK unemployment rate for the three months to July 2011 was 7.9% of the economically active population, up +0.3 on the quarter. The total number of unemployed people increased by +80,000 over the quarter to reach 2.51 million, according to the Office for National Statistics. This is the largest quarterly increase in unemployment since the three months to August 2009.
The Swiss unemployment rate was 2.8% in August 2011, month-on-month unemployment rose by +2,487 individuals, according to the State Secretariat for the Economy.
Greek unemployment increased by +36.3% or by +211,321 individuals to 793,685 in June 2011 when compared with June 2010, according to the Hellenic Statistical Authority. Month-on-month, unemployment fell by -3.5% or by -29,034 individuals in June 2011 when compared with May 2011. The unemployment rate in June 2011 was 16% compared with 11.6% in June 2010 and 16.6% in May 2011.
The latest Business Factors Index published by Bibby Financial Services suggests 81% in the UK business services sector admit they are faring no better than they were this time last year. The figures corroborate findings from the Confederation of British Industry whose latest economic forecast reveals the economy expanded only slowly in the second quarter of this year and warned that the UK is likely to experience slow growth in 2011-2012.
Unemployment in Germany was down by -231,000 individuals to 2,796,000 or down to 6.6% in September 2011 compared with September 2010, when the unemployment rate was 7.2%, according to the German Federal Labour Agency. Month-on-month, unemployment fell by -149,000 individuals in September 2011.
The unemployment rate in the countries, which are part of the Organisation for Economic Co-Operation and Development area (OECD) was steady at 8.2% in July 2011, unchanged for the fifth consecutive month. Between June and July unemployment rates for OECD countries displayed very little movement. Around 44.5 million people were unemployed across the OECD area in July 2011, down 2.0 million from July 2010 but still 11.4 million higher than in July 2008.
The global economic recovery is slowing, with world growth projected at +4% in both 2011 and 2012, down from over +5% in 2010, according to the latest forecast by the International Monetary Fund (IMF). And even this lowered projection counts on a lot going well. Only if governments move decisively on fiscal policy, financial repairs, and external rebalancing, can we hope for stronger and more robust recovery.
> COMPANY NEWS
HP continues to hit the press for all of the wrong reasons. Following HP’s decision earlier in the summer to wind down the PC and tablet group, and spin or sell off the Palm division, the company has confirmed it will lay off employees, particularly in the webOS section of operations. Reports suggest that as many as 500 employees may be affected. HP decided its Mark Hurd replacement wasn’t working out and ousted CEO Leo Apotheker after just 11 months on the job, replacing him with ex eBay CEO Meg Whitman. Document files with the SEC suggest Apotheker will get a severance payment of US$7.2 million, plus a $2.4 million performance bonus and additional stock benefits. The blogosphere has been particularly active with opinions about the appointment, which have generally not been favorable. By way of footnote on HP, there is a rumour from Venturebeat that Amazon is interested in Palm. Probably more to come on that, maybe next month.
Nokia continues to struggle and announced another 3,500 job cuts across the company as it tries to align its costs with falling market share.
Carol Bartz was fired from her job as Yahoo CEO and replaced on an interim basis by the company’s chief financial officer, Tim Morse. Bartz was a high profile addition to Yahoo and her firing appears to have been handled poorly. Bartz sent a brief e-mail to employees saying, “I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s Chairman of the Board. It has been my pleasure to work with all of you and I wish you only the best going forward”.
Five chip makers, including Intel, IBM, Samsung Electronics, GlobalFoundries and Taiwan Semiconductor Manufacturing Co. have committed investment of $4.4 billion in research and development in the state of New York over the next five years, to develop new 450-millimeter chip wafer technology. The investment will retain and create 6,900 jobs in upstate New York, including 2,500 new technology roles. No private company will receive any state funds as part of the agreement. To support the project, New York state will invest $400 million in the State University of New York (SUNY) College for Nanoscale and Science Engineering (CNSE) in Albany, including $100 million for energy efficiency and low-cost energy allowances. The state investment in CNSE will be made over a five-year period. “The state doesn’t fund business. The state funds SUNY if and only if the jobs are actually being created.”
> MERGER & ACQUISITION ACTIVITY
Broadcom agreed to acquire NetLogic Microsystems Inc. for about $3.7-billion in cash. Broadcom designs chips that are used in products ranging from cable boxes to cellphones. It says NetLogic will extend its product line with a number of new processors. The transaction has been approved by both companies’ boards. It still needs regulatory clearance in the U.S., Taiwan and China, but it is expected to close in the first half of next year. Broadcom expects the acquisition to boost earnings by about 10 cents per share next year. Broadcom based in Irvine, Calif., also said it expects third-quarter revenue to fall in the middle of a previously announced range of $1.9-billion to $2.0-billion. Analysts polled by FactSet expect $1.95-billion.
Google bought Zagat in an effort to bolster its local products with the restaurant rating service. More notably is that Zagat is a content company, best known for its original reviews and rating service. The Zagat purchase, which probably didn’t amount to any material sum for Google, raises a few interesting questions. Will Google keep Zagat’s pay wall? Probably not. Will Google maintain Zagat’s guide publishing business? Is this Zagat purchase the beginning of a series of content moves for Google?
Consolidation in the storage industry continues with Hitachi Data Systems (HDS) buying BlueArc, its long-time partner for network attached storage (NAS) systems.
For the past five years, HDS had been an OEM customer for BlueArc’s Titan Series Servers. BlueArc makes high-end storage systems for managing unstructured data–files, spreadsheets, digital content and images–that are used by high-performance computing (HPC), oil and gas companies, life sciences and post-production digital content providers. It also specializes in storage systems that can attack big data, as do rivals such as EMC and IBM. Hitachi, which previously only sold block-level storage, can now add the intellectual property of BlueArc to its portfolio. Hitachi needs BlueArc to supplement its block-based Virtual Storage Platform and Universal Storage Platform and to sell to the large customers that are outside of Hitachi’s traditional grasp. The consolidation could be one of the last in a long line of storage acquisitions. In September, 2010, HP acquired 3PAR; in November, 2010, EMC acquired Isilon; in December, 2010, Dell snapped up Compellent; and, in June, 2011, Oracle reeled in PillarData.
Hybris Software has merged with Montreal’s iCongo in a deal which will give the e-commerce software maker more experience in deploying its products through the cloud. In wake of the deal, the combined company will operate as Hybris Software and will be headquartered in Munich, Germany. The iCongo and Hybris product lines will be merged into a joint retail offering that will be available as an on-premise, hosted or hybrid offering. The new Hybris will offer customers a comprehensive commerce solution that will compete with big players such as IBM Corp. and Oracle Corp. In addition to gaining a stronger integrated order management capability and key experience working with hosted software delivery, Hybris will also improve its North American presence.
SAP is buying business-to-business e-commerce services provider Crossgate for an undisclosed amount. Crossgate is a long term partner of SAP, and boasts 40,000 business partners, with customers including BASF, Olivetti and mobile telco 3.
Its technology enables companies to fully network with trading partners via electronic data exchange (EDI). SAP says the acquisition will allow it to deliver rapid value to customers looking to collaborate, share data and automate processes that link customers and. Crossgate also boasts e-invoicing services which cover signatures, compliance monitoring, integrated with customers’ backend systems and finance processes. In 2008, SAP invested in Crossgate, which then entered a global reseller agreement that allowed SAP to offer its customers Crossgate’s B2B Content Engine as an SAP solution extension. SAP has also been reselling SAP E-Invoicing for Compliance application by Crossgate, which allows companies to send and receive digitally signed, compliant PDFs or EDI invoices electronically.
Google has acquired over 1,000 patents from IBM, as part of its strategy to strengthen its patent portfolio to counter litigation, according to records of the United States Patent and Trademark Office. Google also acquired another over 1,000 patents from IBM in July. It transferred recently some patents to smartphone maker HTC to help it pursue patent litigation against Apple. Google has been interested in acquiring patents for some time now, which led to its failed bid in June for the patents of Nortel Networks, and its proposed acquisition of Motorola Mobility for about US$12.5 billion.
Twitter has acquired Julpan, a startup founded last year that analyzes the way people share information on the social web with the goal of delivering fresh and relevant content to users. Twitter bought them to enhance their ongoing efforts to surface more relevant content to users in real time.
IT services company Computer Sciences Corp. has acquired AppLabs Technologies, a privately held Indian software testing services provider, for an undisclosed amount. AppLabs, which prided itself on being an independent provider of software testing services to about 150 clients, decided to sell the business to provide an exit to WestBridge Capital, a large investor in the Hyderabad-based company. CSC, which already has about 6,000 staff providing testing services, will use the 2,500 staff from AppLabs to offer independent testing services to customers. A key trend in the market is that customers want their testing services provider to be separate from the software provider, to get an independent validation of the work, he added.
Patience finally paid off for Ottawa’s Zarklink Semiconductor Inc. After months of rejecting offers from Microsemi Corp, the California company finally raised its bid and increased the amount it is willing to pay for Zarlink debentures. That was enough for the Zarlink board to agree to recommend shareholders accept what is now a $525 million share offer, up from $445 million. Zarlink designs mixed signal chips for some of the leading network equipment makers, as well as wireless chips for implantable medical devices. Microsemi makes a wide range of semiconductors, including mixed signal and wireless integrated circuits.
> PRIMARY SOURCES:
IT World Canada – http://www.itworldcanada.com
Ottawa Business Journal – http://www.ottawabusinessjournal.com
ZDNet – http://www.zdnet.com
Canada IT – http://www.canadait.com
Monitor – http://www.monitortoday.com
