Industry News – November 2016

A Little History of previous year’s Novembers

Five years ago, in November 2011, Mosaid was sold to Sterling Partners for $590 million, ending a WiLan hostile takeover attempt. Japanese company Rakuten paid $315 million for e-book company Kobo; Huawei technologies bought Symantec out of a storage and security joint venture to the tune of $530 million; Yahoo paid $270 million for online advertising company Interclick; and Best Buy paid $167 million for internet technology company Mindshift. In November 2012, Cisco made two significant “buys”: cloud infrastructure company Meraki ($1.2B) and cloud datacentre and software company Cloupia ($125M); Dell bought software tools company Gale Technologies; NCR bought retail software company Retalix ($650M); Cray bought software company Appro ($25M); Sprint Nextel bought a chunk of US Cellular ($480M); and Toronto-based NexJ bought Broadstreet for $8.2 million.  Three years ago, in November 2013, Opentext paid $1.1 billion for cloud-based integration services company GXS Group and another Canadian deal saw Mitel buy Aastra for close to $400 million. Other deals 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. November 2014 was an exceptionally quiet month on the M&A front with the largest deal being the merger of two semiconductor companies, Cypress Semiconductor and Spansion, to form a $4 billion company; private equity company Carlyle Group paid $700 million for investment bank technology company Dealogic and Yahoo shelled out $640 million for video advertising company BrightRoll. Last year, November 2015 saw a number of smaller M&A deals, but not much in the way of mega-deals. The only billion-dollar deal saw Expedia pay $3.9 billion for HomeAway as a vehicle to better compete with Airbnb. Zayo Holding Group became the first foreign company to own a Canadian telco after paying $465 million for Allstream. Other, smaller deals saw Apple buy Faceshift, a motion capture company whose technology was used in the latest Star Wars movie; and Lightspeed POS bought SEOshop, increasing its size as a competitor to Shopify. Other deals saw Ingram Micro grow its Brazilian presence with the purchase of ACAO; PCM bought Edmonton-based services firm Acrodex; data centre company CentriLogic bought infrastructure company Advanced Knowledge Networks; solution provider Scalar Systems bought another Toronto company, professional services firm Eosensa; and Washington-based New Signature bought Toronto-based Microsoft Partner, Imason.

Which brings us back to the present

November 2016 saw some M&A activity, although it was not too busy. The big deal of the month saw Broadcom acquire Brocade Communication Systems in an all-cash transaction of $5.9 billion; Adobe purchased multi-channel programmatic video platform TubeMogul for $540 million; IT services and outsourcing provider Wipro Limited will acquire IT cloud consulting firm Appirio for $500 million; Oracle Corp. has announced its plans to acquire DNS solution provider, Dyn Inc.; SoftwareOne acquired and integrated House of Lync; and Avnet completed an acquisition of Hackster.  In other news, hackers caused some problems for Casino Rama Resort, claiming to have both employee and client information going back a number of years; also AdultFriendFinder exposed 340 million users’ information. A Harvey Nash Technology Survey suggests 94% of technology professionals across the world believe a significant part of their job will be automated within ten years, rendering their current skills redundant.

The economic indicators in the US were generally favourable and jobs numbers were quite positive. Canada’s economy continues the same tepid trend we have seen for quite some time. Sometimes up a little, sometimes down a little, with unemployment hovering around the 7% mark.

In this Issue:

> General Interest
> Merger & Acquisition Activity
> Primary Sources


> GENERAL INTEREST

General

The Casino Rama Resort said a hacker claimed to have accessed customer, employee and vendor information, some of which dates back nine years. As a result, anyone who has been to or worked at the hotel or casino are being warned to monitor and verify all bank accounts, credit card and other financial transaction statements and report any suspicious activity to the appropriate financial institution

More than 400 million accounts have been exposed by a hack into FriendFinder Networks‘ plethora of adult dating and pornography sites. AdultFriendFinder, marketed as the “world’s largest sex and swinger community”, is the primary target with 340 million users exposed. Popular sites including Penthouse.com were also affected.

A Harvey Nash Technology Survey shows that the change in technology is so rapid that 94% believe their career would be severely limited if they didn’t teach themselves new technical skills.

The economy – Canada

The Canadian staffing index edged up 2% from September and also rose 2% when compared with October of last year. The index, which measures staffing activity in Canada, rose to a reading of 110 from a reading of 108 in September. The number of working days in October this year fell 5% when compared to last year.

The Canadian economy added 44,000 new jobs in October, but the jobless rate stayed at 7% because more people were also looking for work, CBC News reports. The gains came from part-time jobs, with more than 67,000 new positions, Statistics Canada reported today. The flip side is that the economy lost more than 23,000 full-time jobs during the month.

The economy – US

The number of IT jobs in the US edged up 0.13% in October from September to almost 5.2 million, reported TechServe Alliance, an association of IT and engineering staffing companies. The number of US engineering jobs added remained sluggish, edging up only 0.02% in October from September to more than 2.5 million jobs. Year-over-year, the increase was an anemic 0.6%, representing 15,100 engineering jobs.

The US leading economic index from The Conference Board rose 0.1% in November, and the US economy is growing at a moderate pace that will likely continue through early next year. US gross domestic product is still expected to grow 1.5% in 2016. However, the forecasters now expect GDP to grow 2.2% in 2017, down from a projection made in the third-quarter report that called for growth of 2.3%; for 2018, forecasters predict GDP to grow 2.1%, down from 2.3% in the prior report. The forecasters raised their estimate of job growth in 2016. They now estimate the US will add 206,000 jobs a month in 2016, up from the previous forecast of 204,600 jobs per month. The survey of 42 forecasters was conducted before the election on Nov. 8. Looking at just the fourth quarter of 2016 only, forecasters project GDP growth at 2.2%, down from the previous forecast of 2.3%.

The Conference Board’s US Employment Trends Index rose in October to a reading of 128.97 from September’s downwardly revised reading of 128.29. The October reading, which followed an increase in September, is up 1.0% from the same month a year ago. The Conference Board’s consumer confidence index rose significantly in November after posting a decline in October. The index rose to a reading of 107.1 (1985=100), up from 100.8 in October.

US private-sector employment rose by 147,000 jobs in October from September, according to the ADP national employment report. This is down from the total number of jobs added in September, which was revised up from 154,000 to 202,000.

US real gross domestic product grew at an annual rate of 3.2% in the third quarter, according to the second estimate of GDP growth released today by the US Commerce Department. The new estimate is up from the “advance” estimate, which pegged growth at 2.9%. In the second quarter, real GDP advanced 1.4%.

Tech hiring will remain hot in 2017 but most US hiring managers are more cautious with hiring plans than in the past two years, according to the annual hiring survey released today by job board operator DHI Group Inc. Some 68% of tech-focused hiring managers said they anticipate more hiring in 2017, a decrease of 10 points from 2015.

Private employers hired far more workers than expected in November, suggesting the pace of hiring picked up after several months of moving sideways, MarketWatch reports. Payroll processor ADP said that 216,000 net new jobs were added in the month, much more than the Econoday consensus of 160,000. October’s original tally of 147,000 was revised down substantially, to 119,000.

Mexico‘s economy posted its fastest growth in more than two years as services picked up by the most since 2011 even as industrial output was sluggish. Gross domestic product grew by 1.0% in the third quarter compared with the prior quarter, according to seasonally adjusted data from Mexico’s statistics agency, in-line with estimates in a Reuters poll. It was the fastest quarterly expansion since the second quarter of 2014.

The economy – Outside North America

Employment outlook continues to grow in the UK but at a slower pace and real wages look likely to fall in 2017 amid continued Brexit uncertainty. This is according to the latest Chartered Institute of Personnel and Development/Adecco Group Labour Market Outlook report, which highlights challenges facing organisations and finds that employers don’t want and aren’t ready for a hard Brexit.

Demand for both permanent and temporary staff in the UK was at the highest since May according to the latest Markit/Recruitment and Employment Confederation Report on Jobs.

Hiring intent in India is forecasted to increase about 7-10% in 2017, while employability of the talent pool joining the workforce every year has increased from 33% in 2014 to 40% this year, according to the India Skills Report 2017, a joint initiative from recruitment firms Peoplestrong and Wheebox.

According to data from Eurostat, the statistical body of the EU, one in five people found a job in Q2.

The unemployment rate in Portugal decreased in the third quarter ended September to 10.5% from 11.9% last year according to figures from Statistics Portugal. The number of unemployed people decreased to 549,500 in the September quarter from 618,800 a year ago.

Confidence in the labour market in France has improved in the 3rd quarter of 2016 as 44% of jobseekers say they are confident in the labour market’s improvement, an increase of 3% compared to last year according to data from PageGroup.

More than one-fifth of Brazilian workers are either unemployed, working part time or have given up finding a job, according to statistics agency IBGE. The IBGE said the so-called labour underutilization rate rose in the third quarter to 22.9 million people, or 21.2% of the workforce, from 18% a year earlier.

SENAI, the Brazilian National Service for Industrial Training, has stated that between 2017 and 2020, Brazil will have to qualify 13 million workers in industrial jobs, in the superior, technical and qualification levels due to an increasing demand for talent.

The outsourcing sector is expected to increase its contribution to Bulgaria’s GDP to 6.2% by 2020, according to data from the Bulgarian Outsourcing Association. The sector is expected to generate USD 2.86 billion in sales revenue in 2020.


> MERGER & ACQUISITION ACTIVITY

Broadcom buys Brocade for $5.9 billion

Broadcom Ltd., has acquired Brocade Communication Systems, Inc., a leader in fibre channel storage area network switching and IP networking, in an all-cash transaction of $5.9 billion. Broadcom, a provider of connectivity components such as Wi-Fi chips to companies like Apple, HTC, and LG, continues to invest in the Internet of Things (IoT) with this latest acquisition that comes a year after a $37 billion merger with fellow chip maker, Avago. Earlier this year, Brocade had acquired Ruckus Wireless for $1.2 billion. This move comes in an effort to maintain Broadcom’s position as one of the leading providers of enterprise storage connectivity solutions to OEM customers. Brocade’s storage area network business will be tied into Broadcom’s offerings to bolster its enterprise storage portfolio.

Adobe Pays $540 Million for TubeMogul

Adobe Systems Inc. is paying $540 million and incorporating multi-channel programmatic video platform TubeMogul into its signature Marketing Cloud offering. By integrating TubeMogul into Marketing Cloud – and specifically their Media Optimizer and Primetime solutions – Adobe will be able to help more companies and ad agencies optimize their ad buying by providing the tools they need to divide their audience with greater granularity, before choosing the right channel to target the right segment.

Oracle Buys Dyn

Oracle Corp., based out of Redwood Shores, Calif., is buying New Hampshire-based Dyn, Inc. In addition to DNS provider services, Dyn also optimizes Internet applications and cloud services to deliver faster access and reduced page load times. Now Oracle users will soon be able to enjoy the same level of optimization services.
Oracle officials tout the move as a play to add Dyn’s DNS solution to its growing portfolio of enterprise-level services, creating a “one-stop shop” for Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS).

Avnet Buys Hackster

Avnet Inc., which sold off its Technology Solutions Group just two months ago to Tech Data, completed an acquisition of its own by wrapping up the Hackster Inc. deal. The Hackster acquisition is a two-part transaction in which Avnet will get the rest of the company on January 2017. Hackster.io is an online community that helps users worldwide to learn how to design, create and program Internet-connected hardware. The combination of Hackster.io with Avnet’s recently launched MakerSource resource directory and acquisition of Premier Farnell’s community will allow start-ups to design and create new ideas, then find the resources to support them as they prepare to take their product to market. Hackster.io engages with nearly 90 technology partners, and maintains 100 Hackster Live ambassadors that support a network consisting of close to 200,000 engineers, makers and hobbyists.

SoftwareOne Buys House of Lync

SoftwareOne has acquired and integrated House of Lync, a Microsoft High Touch Partner and part of Microsoft’s Skype Operations Framework, creating an improved Skype for Business unified communication (UC) solution for its global enterprise customers. This is a direct response to the rising demand of Skype for Business services. House of Lync works with organizations in order to deploy Skype for Business. The company specializes in collaboration, enterprise voice, cloud, on-premises, managed services, customer application integration, contact centres, conferencing, hybrid integrations with traditional PBX’s, and Office 365.


> 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/