Industry News – December 2016

A Little History of previous year’s Decembers

Five years ago, in December 2011, Ottawa’s March Networks was snapped up by Infinova Canada for $90 million, and Toronto-based Rypple was acquired by Salesforce.com. The BIG deal was SAP’s $3.4 billion purchase of SuccessFactors, who had also announced they were buying Jobs2Web for $110 million. It was IBM that was the most active acquirer of the month, paying $440 million for DemandTec, also picking up Emptoris in the procurement world and Irish company Curam Software in the government sector. Four years ago, in December 2012, there was a fair amount of M&A activity with Oracle making two acquisitions, marketing automation company Eloqua ($871 million) and Dataraker which provides analytics for utilities companies. The big deal of the month saw Sprint pay $2.2 billion to take full control of cellular competitor Clearwire.  Montreal-based Cogeco paid $635 million for Peer 1 Networks and NCR paid $635 million for retail software and services company Retalix. In the BYOD space, Citrix bought mobile device management company Zenprise for $355 million. Finally, Redknee added 1200 employees and 130 new clients through the purchase of Nokia Siemens Business Support Network. December 2013 was a slow month; however, 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. December 2014 was not such a slow news month, with the political and technical ramifications of “the Sony hack” causing uproar, some very positive economic indicators out of the US and some big names making acquisitions, albeit not huge deals. Microsoft made two acquisitions, the $200 million purchase of mobile email app startup Acompli and mobile development company HockeyApp (which has nothing to do with hockey). SAP bought travel and expense management company Concur; Intel bought a Montreal-based identity management company PasswordBox; Oracle bought digital marketing company Datalogix; Teradata bought data archiving company Rainstor; and MongoDB bought high-scale storage engine company WiredTiger. December 2015 was not a busy M&A month but there was some interesting activity. The big deal saw Canadian telco Shaw make a big play into the cellular space with its proposed acquisition of Wind for $1.6 billion. Meanwhile Rogers was also out shopping and growing its Maritimes presence through the acquisition of Internetworking Atlantic Inc. Other deals in December were not large but did feature some of the big players. Oracle bought Stackhouse, a cloud company with a specialization in “containers”; IBM boosted its video in the cloud capabilities with the purchase of Clearleap; and Microsoft picked up a mobile communications company, Talko. Other deals saw Ingram Micro buy the Odin Service Automation business from Parallels and in the storage world Carbonite bought Evault from Seagate.

Which brings us back to the present

In December 2016, Adecco sold its majority stake in Beeline VMS to GTRC, a private equity firm, for $100 million in cash plus a $30 million note; CRN solution provider SS&C purchased asset service firm Conifer for $88.5 million; solution provider QRX Technology Group acquired IT equipment provider Kerr Norton at the beginning of the month; networking solution provider, Juniper Networks acquired cloud operations management provider AppFormix; Uber bought start-up Geometric Intelligence Inc.; and Shopify acquired Tiny Hearts, a Toronto-based mobile product development studio.

In other news, Yahoo disclosed that one billion accounts were hacked in 2013 making it the largest data breach recorded in history. To safeguard against hacking attempts on your devices, Check Point Software advises users to make sure they download the latest versions of software as they have discovered new malware that targets devices running outdated software. Cyber attacks and security breaches are also a major concern for IT and business professionals where, according to Symantec, 30% of business surveyed have experienced a hack over the last two years.

In this Issue:

> General Interest
> Company News
> Merger & Acquisition Activity
> Primary Sources


> GENERAL INTEREST

General

On the heels of announcing that 500 million accounts had been hacked in 2014, Yahoo recently disclosed that one billion accounts were hacked in 2013. The user information potentially stolen during this hack could include names, email addresses, phone numbers, dates of birth, hashed passwords and encrypted and unencrypted security questions and answers. Yahoo is confident that payment card data or bank account information was not stolen during this attack.

It is more important than ever before to protect data and information from hackers. One way to ensure your information is secure is by downloading the latest software versions on all devices. Security company, Check Point Software has discovered a new malware campaign that targets devices running outdated versions of software, specifically Android 4 and 5. Check Point estimates the malware campaign is infecting 13,000 devices a day and believes that more than one million Google accounts have already been compromised.

Cyber security was a primary concern for many business professionals in 2016. Research sponsored by Symantec, a leader in cyber security, indicates that 30% of IT and business professionals have reported that their data and information has been hacked in the last two years.

The economy – Canada

Statistics Canada reported that as the economy created 10,700 more jobs, Canada’s jobless rate went down from 7% in October to 6.8% in November. In the third quarter, Canada’s real GDP rose 0.9% and, expressed at an annualized rate, real GDP rose 3.5%.

A study from Hays Specialist Recruitment Canada reported that two-thirds of Canadian employers surveyed anticipate an increase in business activity while 55% will only increase salaries by 3% or less and only one-third plan to increase headcount.

According to IT World Canada’s CanadianCIO Census data, Canadian companies plan on doing less hiring in 2017 than their U.S. and U.K. counterparts. Canada may see jobs being cut in IT areas such as training, application maintenance and support, and data centre management.

IDC Canada predicts that IT investment in Canada will rebound in 2017, specifically in cloud, social, big data and mobile.

TEKsystems polled more than 700 North American IT leaders and found that 49% expect their IT budget to increase in 2017. Last year, TEKsystems’ research concluded that only 37% expected their IT budgets to grow.

The economy – US

TechServe Alliance reported the number of IT jobs in the US increased 0.13% in October from September to almost 5.2 million and IT employment increased by 2.9% year-over-year, which includes the creation of 146,500 more IT jobs.

TEKsystems’ annual IT Forecast research showed that IT leaders in the US expect contingent IT staff to increase from the current 20% to 24% in 2017. Only 36% of IT leaders plan to increase salaries in 2017.

Only 16% of US CIOs plan to expand IT teams in the first half of 2017 as indicated by research conducted by Robert Half Technology and presented in their IT Hiring Forecast and Local Trend Report.

The Employer Associations of America’s 2017 National Business Trends Survey reports that 62% of employers are facing economic challenges related to talent recruitment, which includes 31% who are dissatisfied with their current recruiting efforts. US employers currently face challenges with recruiting skilled production workers, professional workers and high-potential middle managers and retaining entry-level workers.

The American Institute of CPAs reported in their fourth-quarter Economic Outlook Survey that 68% of CPA executives surveyed are optimistic about the US economy for 2017. This is the highest percentage since early 2015.

The Institute for Supply Management’s purchasing managers index for US manufacturing reported the index reading was 53.2%, up from 51.9% in October.

The US Bureau of Labor Statistics reported in November temporary help jobs rose by 14,300 with the year-over-year growth rate up to 1.92% from 1.46% in October.

In a survey conducted by the National Association for Business Economics, economic forecasters project inflation-adjusted US real GDP will grow at an annualized rate of 2.2% in 2017.

The Conference Board’s US Employment Trends Index rose from 128.95 in October to 129.96 in November signaling the potential for acceleration in wages and inflation.  

The economy – Outside North America

Eurostat, the statistical office of the European Union, reported the euro area (EA19) seasonally-adjusted unemployment went down to 9.8% in October. The EU28 unemployment rate went down to 8.3% with the highest unemployment rates seen in Greece (23.4%) and Spain (19.2%).

Data from Markit/Recruitment and Employment Confederation showed permanent staff placements in the UK continue to rise and the rate of growth of temporary/contract staff appointments reached a seven-month high.

Morgan McKinley London Employment Monitor reported London city jobs fell 14% in November from October even though jobs have increased by 6% on a year-over-year basis.

Morgan McKinley reported in their Irish Employment Monitor the availability of professional jobs in Ireland fell nationally by 12% in November compared to November 2015.

In their Q4 Quarterly Economic Outlook, the Irish Business and Employer Confederation has forecasted Ireland’s GDP will grow at a rate of 3.7%, down from the previous forecast of 3.9%. The Confederation’s 2017 GDP forecast is also down from 3.2% to 2.8%. Despite the decrease in the GDP forecast, Ireland should see employment levels grow and reach peak levels by the end of 2017.

The German Federal Bank, Bundesbank, projects German economic growth will continue upward due to a favorable labour market and rising household income.

A survey of 4,930 employers across India conducted by Manpower Group indicates Indian employers plan to hire at a strong pace in the IT and telecom sectors during the first quarter of 2017.

The Swiss Secretariat for Economic Affairs reported the registered unemployment rate in Switzerland decreased from 3.4% this time last year to 3.3%.

The Randstad Work Monitor has reported that in 2016, 56% of employees in the Netherlands were working below their skill and education level with this figure going up to 65% for workers 34 or younger.  

SVT Nyheter reported for Sweden to prevent labour shortages from impeding economic growth the country would need 64,000 immigrants annually.

Statistics Japan reported the seasonally adjusted jobless rate in October remained stable compared to data collected in October 2015 with an increase in employed persons of 630,000.

The Robert Walters Asia Job Index reported the digital and e-commerce sectors saw 11% growth compared to 2015, job advertisements rose in three of five Asia Pacific regions including a 21% increase in China. The Index also reported a 34% increase in legal and compliance job ads due to healthy growth in the financial technology sector. Job advertisements fell slightly in Malaysia (1%) and Singapore (2%), while Taiwan saw some growth with an increase of 3%.

The Brazilian Institute of Geography and Statistics reported Brazil’s jobless rate rose to 11.8% up from 8.9% the previous year.


> COMPANY NEWS

Amazon announced that its Prime Air drone delivery service made its first drop on December 7th, which took 13 minutes to complete.

GoPro, the sports camera company, announced it will lay off 15% of its workforce to reduce operating expenses by $650 million and return to profitability. Tony Bates, GoPro President will also end his tenure with the company by the end of the year.


> MERGER & ACQUISITION ACTIVITY

GTRC Buys Beeline VMS from Adecco

GTRC, a Chicago-based private equity firm has purchased the majority stake in Adecco’s Beeline vendor management system (VMS) for $100 million in cash plus a $30 million note. GTRC already holds a major stake in IQNavigator VMS and has plans to merge Beeline and IQNavigator. Adecco will hold a minority interest in the combined VMS firm. GRTC’s purchase and merge of Beeline and IQNavigator means that the world’s largest VMS providers will operate independently of staffing firms. Once the two VMS providers have been merged, the combined company will have over 500 employees and will continue to operate from offices in Florida and Colorado.

SS&C Technologies Purchases Conifer Financial Services

CRN Solution provider, SS&C Technologies has added the purchase of Conifer Financial Services for $88.5 million to its growing list of M&A activity this year. In 2016, SS&C bought CRM platform developer Salentica in October; middle- and back-office management firm Wells Fargo Global Fund Services in September; and it acquired a minority stake in learning technology provider Nervanix in April. SS&C’s recent acquisitions have had a positive impact on the company’s top line, with sales in the most recent quarter totaling $383.3 million, up 36.5 percent from $280.9 million last year.

QRX Technology Group Acquires Kerr Norton

QRX Technologies, one of Canada’s largest managed print service company with revenues between $25 and $30 million, acquired Kerr Norton to strengthen QRX’s presence in the IT equipment, supplies and service market. QRX is most attracted to Kerr Norton’s green initiatives to reduce waste and re-use raw materials and, with this acquisition, aims to provide more environmental solutions to their service and product offering.

Juniper Networks Acquires AppFormix

Juniper Networks, a networking solution provider, acquired cloud operations management provider AppFormix to add analytics to their service portfolio, offering a stronger cloud operations management solution. Juniper plans to combine AppFormix with their existing Contrail product line to improve cloud networking and service orchestration.

Uber Purchases Geometric Intelligence Inc.

In a play to build an artificial-intelligence research lab, Uber Technologies Inc. has purchased startup Geometric Intelligence Inc. The 15-person startup will offer Uber expertise in developing machine learning techniques to improve how Uber matches drivers with passengers and to develop new techniques for building self-driving cars.

Shopify Acquires Tiny Hearts

Canadian e-commerce success Shopify Inc. acquired Tiny Hearts, a Toronto-based mobile product development studio. With the acquisition, Shopify has purchased Tiny Hearts’ existing apps and the Tiny Hearts product team will begin working in Shopify’s Toronto office. Shopify and Tiny Hearts have a healthy business relationship where Shopify purchased BBT merchandise from Tiny Hearts and Tiny Hearts built ShopKey, Shopify’s ecommerce keyboard for iOS. Tiny Hearts and Shopify also collaborated on Popify, Shopify’s first pop-up shop.


> PRIMARY SOURCES:

IT World Canada – http://www.itworldcanada.com/
TechRepublic –  http://www.techrepublic.com/
ZDNet – http://www.zdnet.com/
Information Week – http://www.informationweek.com/
Staffing Industry Analysts – http://www.staffingindustry.com/