IT Industry News – April 2017

A Little History of April in previous years

Five years ago, in April 2012 Facebook made a $1 billion bid for Instagram, Facebook also bought a piece of the patent action from Microsoft after Microsoft had paid AOL more than $1 billion for the patents. DELL made three acquisitions this month, Wyse technology, Clerity Solutions and Make Technologies. IBM picked up Toronto based BI company Varicent Software; Intel paid $140 million for some assets from Cray; Citrix picked up Podio; and Twitter bought a startup to acquire its team of developers.

Three years ago, in April 2013 Rogers paid $200 million for Primus’s Blackiron subsidiary, including datacenter capability; Toronto based Softchoice also chose to go private in a $412 million private equity deal; Shaw paid $225 million for an Enmax fibre network subsidiary in Calgary; Best Buy sold its stake in Carphone Warehouse for $775 million (having paid $2.1 billion in 2008). Google paid $30 million for social company Wavii. Other big names on the acquisition trail in April 2013 included Intel (Mashery), IBM (Urbancode); Computer Associates (Nolio). Finally, Facebook had a couple of small acquisitions Osmeta and Parse.

April 2014 saw Microsoft officially entered the handset business with the completion of the $7.5 billion purchase of Nokia’s devices business. Zebra Technologies paid $3.5 billion for Motorola’s unit that makes mobile devices for business which is a move in the ever-expanding Internet of Things space. Apple paid $479 million purchase of the LCD chip development unit of Renesas Electronics. IBM snapped up marketing automation software company Silverpop Systems and open source software company Red Hat paid $175 million for storage company Inktank.

In April 2015, there was plenty of action. Nokia was the biggest story, paying $16.5 billion for telecom company Alcatel-Lucent, but there was also a $4 billion deal that saw Capgemini buy services firm IGATE and LinkedIn made its largest acquisition ever, paying $1.5 billion for training portal Lynda.com. LinkedIn also bought a predictive insights startup company, Refresh. Netsuite paid $200 million for ERP and commerce software company Bronto Software and Blackberry reputedly shelled out $150 million for file sharing security company Watchdox. Salesforce was also out shopping, picking up mobile two-factor authentication startup, Toopher. In another deal involving billions, Informatica decided to follow in DELL’s footsteps and go private for a $5.3 billion price tag.

Last year, in April 2016 there were some big deals, the biggest was Bell’s $3.8 billion bid for Manitoba Telephone System. Other large deal saw a Chinese conglomerate bid $3.6 billion for Lexmark; and Mitel shell out $2 billion for Polycom. Oracle paid $663 million for cloud based construction software company Textura. Nokia, who were also in the news announcing layoffs, continued to evolve their business model, this time into the wearable tech arena with the $192 million purchase of Withings. Other deals saw Autodesk acquire 3D animation software company Solid Angle; and Dimension Data bought Toronto based cloud services company Ceryx.

Which brings us back to the present …

April 2017

It has been reported that Microsoft plans to purchase Israeli cloud-monitoring and analytics startup, Cloudyn. Flipkart, one of India’s larger ecommerce companies, has acquired the Indian division of eBay (eBay.in) as part of eBay’s $500 million investment in Flipkart. VMware‘s vCloud Air unit will be acquired by OVH, a French hosting and cloud company. Global professional services provider, Accenture, purchased the UK-based automation services provider, Genfour. Toronto-based startup, Turnstyle Analytics, has been acquired by Yelp for $20 million. California-based Coupa Software purchased Swedish software company, Trade Extensions for $45 million. Montreal-based financial technology provider, Alithya acquired big data solution provider, Systemware Innovation Corporation.

In other news, the demand for PCs continues to decline reaching a low that has not been experienced since 2007. In Q1 of 2017, PC shipments fell by 2.4%, which signifies the 10th quarter of decline.

The ride-hailing company, Lyft, has raised $600 million in additional investments bringing the company’s valuation up to $7.5 billion.

BlackBerry has won a binding arbitration case against Qualcomm for $815 million.

In this Issue:

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


> GENERAL INTEREST

General

The decline in consumer demand for PCs continued through Q1 of 2017 with PC shipments falling to a 10-year low of 62.2 million units. The top six PC vendors in Q1 were Lenovo, HP, Dell, Asus, Apple, and Acer with only Asus and Acer experiencing a decrease in PC shipments. IDC research manager Jay Chou said in a statement said, “The traditional PC market has been through a tough phase, with competition from tablets and smartphones as well as lengthening lifecycles pushing PC shipments down roughly 30% from a peak in 2011.”

The Economy – Canada

In the latest Statistics Canada report, Canada added 18,400 full-time jobs and 1,000 part-time jobs with a slight increase in the unemployment rate of 0.1% bringing the total rate to 6.7%. More Canadians are working in manufacturing while there has been a decline in educational services transportation and warehousing. Specifically, unemployment in Ontario rose from 6.2% to 6.4%.

The Canadian Staffing Index, which measures staffing activity in Canada, rose by 18% in March.

The Economy – US

CompTIA released a report indicating that the US technology industry added 182,220 jobs in 2016 bringing the total to 6.9 million. IT services and custom software services saw the most growth between 2015 and 2016 followed by engineering services, R&D and testing.

Techserve Alliance, an association of IT and engineering staffing companies, reported that engineering jobs in the US increased 0.1% and IT employment increased 0.3% in March.

According to the ADP National Employment Report, private-sector jobs in the US increased by 263,000 in March. At the same time, US companies added the most workers since December 2014 according to a report released by Reuters. The number of service-providing jobs rose by 181,000 while the number of goods-producing jobs only rose by 82,000.

The US Leading Economic Index increased 0.4% in March to a reading of 126.7 (2010=100) according to the Conference Board.

The Conference Board reported the US Employment Trends Index increased to 131.34, which is up 4.3% from one year ago. According to the US Department of Labor, 98,000 jobs were added in March.

During Q1, CEO confidence rose to its highest point in 13 years according to a report released by the Conference Board. 65% of CEOs anticipate improved economic conditions over the next six months.

US Citizenship and Immigration reported that H-1B visas for highly skilled temporary foreign workers reached its cap of 85,000 within one week. This cap impacts the number of skilled temporary foreign workers specializing in IT that can work in the US.

The Business Conditions Survey released by the National Association for Business Economics reported that the number of firms planning to add workers fell to 27% in April down from 30% at the beginning of 2017. 66% of the survey respondents anticipate real GDP growth above 2%. The percentage of respondents who expect wages to rise over the next three months has declined to 44%.

Numbers released by the US Department of Labor indicate that unemployment insurance claims decreased to 250,000, which makes it the 109th consecutive week of claims below 300,000.

The US Commerce Department reported that US real GDP grew at an annual rate of 0.7% in Q1. The US economy grew at the slowest pace in three years in Q1 of 2017, according to Bloomberg.

In their Silicon Valley economic forecast survey, West Valley Staffing Group concluded that 57% of hiring managers in the manufacturing industry predict there will be an increase in hiring in Q2 where only 6% expect their needs to decrease.

The Institute of Supply Management reported an expansion in the manufacturing sector in their Purchasing Managers Index for US Manufacturing. According to MarketWatch, in the months leading up to the Trump election and the months following, American manufacturers have experienced a resurgence, which has caused employment to rise to its highest point in six years.

The Economy – Outside North America

Eurostat, the statistical office of the European Union, reported that the seasonally-adjusted unemployment rate for the euro area EA19 decreased to 9.5%. The unemployment rate in the EU28 decreased to 8.0% with the lowest unemployment rates in the Czech Republic, Germany and Malta and the highest in Greece and Spain. Eurostat also reported the EU employment rate for people aged 20 – 64 increased to 71.1%, with the employment rate for men at 76.9% and for women at 63.5%. The goal is to reach an employment rate of 75% for people aged 20 – 65 by 2020.

The Office for National Statistics reported the number of temporary employees in the UK declined by 2.6% to a total of 1.6 million. The employment rate of people aged 16 to 64 reached 74.6%, which is the highest since 1971. The reports also indicated that the average weekly earnings for employees in the UK increased by 2.3%.

According to the Markit/Recruitment and Employment Confederation UK Report on Jobs, there has been a continuous decline in the availability of permanent workers for more than a year. There has also been a recent decline in the temporary labour supply throughout the UK.

Professional job vacancies in the UK dropped by 10% while there was a 22% increase in the number of professionals actively seeking new job opportunities according to the Morgan McKinley Irish Employment Monitor.

The German Federal Labour Office reported that the country’s seasonally adjusted unemployment rate fell to 5.8%. Unemployment decreased by 18,000 in western Germany and by 12,000 in eastern Germany.

The Institute for Labour Market and Professional Research (IAB) reported that it is expected that Germany’s labour market will experience positive growth this quarter and see a decrease in the number of unemployed person.

A study conducted by ExperisIT revealed that only 58% of IT firms in India plan to hire in the coming months. This is down 15% from last quarter and has been attributed to global slowdown, automation and talent scarcity. 22% of IT services companies surveyed reported their intentions to hire and 34% of the IT companies surveyed reported their intentions to hire software development candidates.

RecruiteX analyzes hiring activity in India, and in their report released by TimeJobs.com, there has been a significant increase in the demand for senior professionals in the country. The demand for professionals with more than 20 years of experience rose by 30% in March. The report also indicated that the healthcare sector was the top hiring industry followed by consulting and real estate.

The Morgan McKinley Asia Pacific Employment Monitor for Q1 reported growth in the financial service market in China and that there has been an increase in the availability of jobs across the Asia Pacific region, including Mainland China, Hong Kong, and Singapore. Despite growth across the region, there was a 13% decrease in job availability in Japan in Q1.

Singapore’s unemployment rate rose to 2.3% in Q1 according to the Labour Market Advance Release First Quarter 2017 report released by the Ministry of Manpower.

The Australia Bureau of Statistics reported that Australia’s jobless rate remained unchanged at 5.9% due to an increase in labour participation. Full-time employment increased to more than 8.2 million while part-time employment decreased to 3.8 million. The number of job vacancies reached its highest point since May 2011 with an increase of 7.3% at the beginning of 2017.

Radio New Zealand reported that businesses are finding it more difficult to hire staff causing a decline in business confidence in the country.

VietNamNet Bridge reported that at the end of 2016, the rate of underemployed young people (15 – 24 years of age) was 7.28%.


> COMPANY NEWS

Uber competitor, Lyft, has made another aggressive push to attract new investors, including Canada’s Public Sector Pension Investment Board (PSP). The recent flurry of investment activity has brought Lyft to a $7.5 billion post-money valuation. Lyft has added over 100 new markets and has been able to increase their user base by 34% from 2016. There was a notable 60% increase in new Lyft users week over week after the #DeleteUber campaign.

BlackBerry and Qualcomm entered into arbitration on April 20, 2016 to settle a dispute over Qualcomm’s agreement to cap royalties applied to payments BlackBerry made under a licence agreement with Qualcomm. Although BlackBerry was paid $815 million and halted Qualcomm’s stock from trading on NASDAQ, BlackBerry anticipates that the working relationship with Qualcomm will not be damaged.


> MERGER & ACQUISITION ACTIVITY

Microsoft Plans to Acquire Cloudyn

Calcalist has reported that Microsoft intends to acquire Cloudyn, an Israeli cloud-monitoring and analytics startup. The deal could be valued at $70 million and covers one of Microsoft’s three key investment areas: intelligent cloud platforms. This potential acquisition falls in line with Microsoft’s recent investments in the cloud space.

Flipkart Raises $1.4B and Acquires eBay.in

Flipkart, a large ecommerce company similar to Amazon based in India, has raised $1.4 billion from eBay, Microsoft and Tencent bringing its investment values up to $11.6 billion. As part of eBay’s $500 million investment, Flipkart has acquired the Indian branch of eBay (eBay.in). This deal follows a number of divestment initiatives from eBay, including eBay selling its Craigslist stake back to Craigslist in 2015 as well as making PayPal a standalone company.

OVH Acquires VMware vCloud Air

In a push to gain traction in the US cloud market, French hosting and cloud company, OVH, has acquired VMware’s vCloud Air unit. The acquisition has brought OVH’s data centre count up to four from only one and will enable them to target the largest cloud market in the world. OVH’s entrance into the market will offer consumers more choice and help push prices down.

Accenture Acquires Genfour

Accenture has acquired UK-based automation services provider, Genfour, which has become a part of Accenture’s Center of Excellence for Intelligent Automation. Genfour’s professionals will join the Accenture Operations Global Intelligent Automation team and help accelerate the transformation and re-engineering of Accenture’s client’s business processes through intelligent automation.

Yelp Acquires Turnstyle Analytics

Yelp has purchased Turnstyle Analytics’ outstanding capital stock for $20 million USD. Yelp will leverage Turnstyle’s free public Wi-Fi service that doubles as a marketing platform and will offer it to their small and medium-sized business clients. Turnstyle has developed a platform for their clients that allows consumers to access free Wi-Fi services by providing their email address. The client can then use the email addresses collected to re-engage customers later and foster retention and loyalty.

Swedish Trade Extensions Acquired by Coupa Software

Coupa Software, a US-based spending management platform for business, has purchased Swedish software company, Trade Extensions for $ 45 million. Trade Extensions specialize in strategic sourcing and optimization of algorithms and has grown by 20 – 30% annually since 2000.

Alithya Acquires Systemware Innovation Corporation Technologies

Toronto-based solution provider, Systemware Innovation Corporation (SWI) Technologies has been acquired by Montreal-based financial technology company, Alithya. SWI specializes in developing big data analytics solutions for organizations in the nuclear, financial and transportation sectors. The acquisition will increase Alithya’s team to 1,500 consultants.


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