November 5th, 2012

IT INDUSTRY NEWS – October 2012

This is my 30,000 foot look at events in the ICT industry for October 2012. What you see here is a précis of the monthly report I produce, which will be available in more detail at the News section of the Eagle website, where you will also find back issues.

A Little History of previous year’s Octobers …

Five years ago in October 2007 Microsoft valued Facebook at $15 billion when it took a minority stake for $204 million, SAP paid $6.8 billion for Business Objects and Nokia paid $8 billion for Navteq, a mapping software company.  IT workers were happier and more secure than ever, NexInnovations closed its doors and a Royalty Review caused consternation for Canada’s oil patch.  In October 2008 doom, gloom and market meltdowns were the big news.  The number of IT jobs in the US dropped by 2% quarter over quarter and Symantec, eBay and Yahoo all announced significant layoffs.  A $5.8 billion merger of telcos in the US was the big deal of the month, with rural telephone company Century Tel buying its bigger peer Embarq.  Ebay bought 3 companies, Bill Me Later ($945 million) plus Denmark companies Ben Bla Avis and BilBasen ($390 million).  Symantec paid $695 million for MessageLabs, Tata paid $505 million for Citi’s Indian BPO arm and HP paid $360 million for LeftHand Networks.  Three years ago in October 2009 news was mixed as the recovery was under way.  Cisco paid $3 Billion for Tandberg, $2.9 Billion for Starent  and $183 Million for ScanSafe.  Adecco paid about $1.1 Billion for MPS Group (includes Beeline); Emerson Electric beefed up its datacenter capability paying $1.2 Billion for Avocent and Sprint Nextel avoided some legal issues by shelling out $831 million for iPCS. Iin October Twenty-Ten Bell Canada bought a data center in Montreal (Hypertec) and picked up xwave from its subsidiary Bell Aliant.  Rogers paid $425 million for Atria networks and IBM picked up Toronto based Clarity Systems.  Last year in October 2011 an industry icon, Steve Jobs passed away and IBM announced Virginia Rometty as their first female CEO.  On the M&A front Oracle made a couple of buys, including RightNow Technologies ($1.5 Billion) and Endeca Technologies; Sony bought Ericsson out of their Sony Ericsson joint venture ($1.5 Billion); Red Hat bought storage company Gluster ($136 million); and Cisco bought BNI Video ($99 million).

Which brings us back to the present …

October 2012 news has been dominated by the devastation wreaked by Hurricane Sandy, the US presidential election and here in Canada, my “favorite” Premier (Dalton McGuinty) stepping down, declaring a political “down tools”.

My observation is that this is the third month in a row that things have been slow on the M&A front.  This seems to be borne out with a report suggesting US VC funding is down about 12% this quarter versus the same quarter last year.  The big deal in October was a $1.5 billion merger of two US cell carriers, T-Mobile and MetroPCS.  They will likely have a rough start as Hurricane Sandy destroyed 25% of cell towers in the 10 states it hit!  There were a number of smaller deals this month, with EMC beefing up in the security area (Silver Tail), Telus expanding its medical solutions portfolio (Kinlogix Medical) and Avnet improving its IBM capabilities (BrightStar and BSP).  In the social networking world Yelp bought its European competitor Qype in a $50 million deal.

In other news Zynga and AMD both announced layoffs, for AMD it was a direct result of a worldwide downturn in demand for PCs.  Gartner tell us that worldwide spending on IT however, will be $3.7 trillion next year, an increase of 3.8% … just not spent on PCs!

Canada’s unemployment rate stays unchanged at 7.4%, in the US unemployment edged up to 7.9%, the Eurozone unemployment is a record 11.6%, however the UK unemployment numbers dropped to 7.9%.  All to say that unemployment remains a widespread critical issue.  Confidence in the economy remains confused, with several reports indicating some positive and some negative sentiments.

It will be interesting to see how our industries react to the US election next month, but it may be a few months before we see that economic impact  I’m an eternal optimist and there are enough signs that we continue in the right direction … until next month, stay positive, walk fast and smile!

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Kevin Dee is CEO of Eagle (a Professional Staffing Company)
Want to know where Canada’s hot jobs are?   Visit the Eagle Job Centre!
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