IT Industry News – April 2018

A Little History of April in previous years

Five years ago, in April 2013 Rogers paid $200 million for Primus’ 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), and Computer Associates (Nolio). Finally, Facebook had a couple of small acquisitions: Osmeta and Parse.

April 2014 saw Microsoft officially enter 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 businesses, which is a move in the ever-expanding “Internet of Things” space. Apple paid $479 million in the 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 provided 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. 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. April 2016 saw some big deals, the biggest was Bell’s $3.8 billion bid for Manitoba Telephone System, which closed in 2017. Other large deals included a Chinese conglomerate bidding $3.6 billion for Lexmark; and Plantronics shelling out $2 billion for Polycom. Oracle paid $663 million for cloud-based construction software company Textura. Nokia, who was 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. Last year in April 2017 Microsoft bought Israeli cloud-monitoring and analytics startup, Cloudyn. Flipkart, one of India’s larger ecommerce companies, acquired the Indian division of eBay (eBay.in) as part of eBay’s $500 million investment in Flipkart. VMware’s vCloud Air unit was 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, was 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. Other interesting news saw ride-hailing company, Lyft, raise $600 million in additional investments bringing the company’s valuation up to $7.5 billion.

Which brings us back to the present

April 2018 was not super busy on the M&A front although there were a few deals, including a $2 billion purchase of Ottawa-based Mitel by Searchlight Partners, who will take the company private. Mobile payments company Square paid $365 million for website company Weebly; iconic photo site Flickr has been bought by SmugMug; Adobe acquired AI startup Uru; Indeed bought Canadian jobs site Workopolis; and HPE Pointnext bought Redpixie.

The website breach of the month was the Nova Scotia Government’s access to information site and marketing forum AppsFlyer tells us that there was about $800 million of fraud in the first quarter of 2018.

The economy in the US continues to show lots of promise, with almost every indicator being positive. There are some indicators that Brexit is starting to impact the UK and the EU negatively. Most other countries, including Canada had reasonably good job numbers.

That’s it for what was happening in the technology space over the last month, compared to the same month in previous years.

In this Issue:

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


> GENERAL INTEREST

General

Mobile tracking and marketing firm AppsFlyer said in a new study that mobile app marketers were exposed to $700 to $800 million in ad fraud in the first quarter of 2018, which is up 30% from the quarterly average for 2017.

Global CEO confidence made further gains in the first quarter, according to The Conference Board’s measure of CEO confidence. In the first quarter, the measure increased to a level of 65, up from 63 in the fourth quarter.

After a 2% fall in 2016, global employee engagement bounced back to 65% in 2017, an all-time high, according to a study from professional services firm Aon. For the study, Aon analyzed more than five million employees at more than 1,000 organizations around the world. It also found that the percentage of employees who were ‘highly’ engaged increased from 24% in 2016 to 27% in 2017.

The Economy – Canada

Canada added 32,300 jobs in March from February for a total of more than 18.6 million jobs, according to seasonally adjusted numbers released by Statistics Canada. A gain of 68,300 full-time jobs in March offset a loss of 35,900 part-time jobs. In the first quarter of 2018, employment edged down by 40,000 due to a decrease in January. Over the long term, employment has been on an upward trend since the second half of 2016.

The Economy – US

 US real gross domestic product grew at an annual rate of 2.3% in the first quarter, according to the “advance” estimate of GDP growth released by the US Commerce Department. This is down from 2.9% GDP growth in the fourth quarter of 2017.

The American Staffing Association’s staffing index rose 1.2% to a rounded reading of 96 in the week of April 9 to April 15, the best reading for this particular week since the start of the ASA Staffing Index in 2006.

The outlook for the US economy is positive, but there is widespread wage growth and increasing shortages of skilled workers, according to the April 2018 NABE Business Conditions Survey. However, the survey found a majority of its respondents did not change their hiring or investment plans based on the recent federal tax cuts.

The Conference Board reported its US Leading Economic Index rose 0.3% in March to a reaching of 109.0 (2016 = 100). The gain was smaller than February’s increase of 0.7% and January’s increase of 0.8%.

The US Department of Labor announced the seasonally adjusted four-week moving average of unemployment claims rose by 1,250 last week to a level of 231,250. Total initial claims for the week fell by 1,000 to a total of 232,000.

Job growth in the US increased in March, The Conference Board’s Employment Trends Index rose to a reading of 107.72 in March, up from a downwardly revised reading of 107.31 in February. The change in March represents a 5.5% gain in the index compared to a year ago.

The US Department of Labor on Friday reported the US gained 103,000 jobs in March and temp jobs rose by 3.8% year over year.

US private sector employment rose by 241,000 jobs in March from February amid a “rip-roaring” job market, according to the ADP National Employment Report. February’s gain was revised upwards to 246,000 from the initially reported 235,000.

ISM’s nonmanufacturing index edged down in March to a reading for 58.8 from February’s reading of 59.5. Readings above 50 generally indicate improving conditions.

The Economy – Outside North America

The impact of Brexit, falling net migration and an ageing population are set to cause a UK workforce crisis by 2025, according to a study from consulting firm Mercer. The study showed that the UK’s available workforce is projected to increase by 820,000 (2.4%) in 2025, a fall from the 9% figure in the 10 years to 2015.

The number of jobs available in London fell by 37% in March when compared to the same period last year, according to the latest Morgan McKinley London Employment Monitor. The Monitor also showed a 44% decrease in professionals seeking jobs in March, year-on-year.

In 2017, the employment rate of people aged 20 to 64 in the European Union stood at 72.2%. This is higher compared with 2016 (71.1%), according to figures from Eurostat, the statistical office of the European Union. Eurostat highlighted a Europe 2020 strategy target of reaching a total employment rate for people aged 20 to 64 of at least 75% in the EU by 2020.

The number of EU workers actively searching for jobs in the UK has dropped by 11% since the EU Referendum in June, according to research from job board Monster. Monster’s data showed that workers from Romania were the least likely to come to the UK to work, as job search traffic on Monster from Romania fell by 52% since June 2016. This was followed by Portugal (41%) and Poland (34%).

The euro area (EA19) seasonally-adjusted unemployment rate stood at 8.5% in February 2018, down from 9.5% in February 2017. This is the lowest rate recorded in the euro area since December 2008, according to Eurostat. EU28 unemployment rate was 7.1% in February 2018, down from 8.0% in February 2017 and the lowest rate recorded in the EU28 since September 2008.

After the Chinese New Year holiday in February, the number of job seekers jumped in this busiest season for job hopping in China, meanwhile, job openings declined over the previous quarter, according to a report from Zhaopin Limited and the China Institute for Employment Research (CIER) at Renmin University of China. The jobs market in China registered steady figures for the first quarter of the year with the unemployment rate at 5.0% in January and February, and 5.1% in March, stable when compared to the same period last year, according to figures from the National Bureau of Statistics.

Hong Kong’s seasonally adjusted unemployment rate stood at 2.9% for the period from January to March 2018, same as that of the previous period from December 2017 to February 2018, according to figures from the Census and Statistics Department.

 The jobless rate in Taiwan fell by 0.14% in March to 3.66%, according to figures from the Directorate-General of Budget, Accounting and Statistics.

The Monster Employment Index for Singapore shows a 6% increase in online recruitment activity for February 2018, when compared to the same period a year ago.

 The seasonally-adjusted unemployment rate in Australia stood at 5.5% in March, down 0.3% when compared to the same period last year, according to figures from the Australian Bureau of Statistics.

The total number of job vacancies in Australia increased by a seasonally-adjusted 4.4% in the three months to February when compared to the previous three-month period, according to the Australian Bureau of Statistics. Total job vacancies rose to 220,900 in the December-February quarter, from 211,700 in the previous quarter, a record high. When compared to the previous year, total job vacancies were up 19.4% in seasonally-adjusted terms.

In March, the number of professional jobs available in Ireland decreased by 10.4%. This is compared to the previous year, according to the latest Morgan McKinley Ireland Employment Monitor.

The unemployment rate in Malaysia decreased to 3.3% in February from 3.5% at the same time last year, according to figures from the Department of Statistics Malaysia.

The Swiss unemployment rate stood at 2.9% in March, down from 3.4% in March of last year according to the State Secretariat for Economic Affairs (SECO).

Over 28 million jobseekers applied for 90,000 job vacancies at Indian Railways during its latest recruitment drive, highlighting the country’s employment crisis. Indian Railways, the country’s publicly owned railway network, is India’s biggest employer. At its latest recruitment drive, the company advertised 26,502 train driver and technician posts, and 62,907 job vacancies for less-skilled positions including trackmen, welders and porters.


> COMPANY NEWS

The Nova Scotia government discovered that its Freedom of Information and Protection of Privacy (FOIPOP) website had been breached. In total, about 7,000 documents were accessed, 250 of which contained “highly sensitive material”.


> MERGER & ACQUISITION ACTIVITY

Adobe acquires AI Startup Uru

Adobe has acquired Uru, a computer vision company that helps marketers understand how they could leverage advertising inside videos, according to a post on the New York-based startup’s website today. The Uru team will be working on Adobe Sensei, a nebulous umbrella encompassing all of the company’s work with AI across its entire suite of products. Given their background, it seems likely that they’ll be put to work on Adobe’s Marketing Cloud applications.

Square pays $365 million for Weebly

Square, the mobile payments and financial services company Jack Dorsey created with Jim McKelvey back in 2009, has been on a buying spree. The latest is fellow San Francisco-based company Weebly, in a deal worth $365 million. As a popular website builder and web-hosting service, Weebly could serve as a key conduit for Square to not only access Weebly’s existing subscription revenue but also cross-sell Square’s own products — which include card readers, software, and payments services — to small businesses.

SmugMug buys Flickr

SmugMug, a photo-sharing service for consumer and professional photographers, has acquired Flickr. Flickr was sold by parent company Oath, a subsidiary of Verizon that includes companies like Yahoo and AOL. Flickr and SmugMug will not merge but will continue to operate as separate independent platforms.  Created 14 years ago, Flickr may no longer be the most popular photo-sharing platform on the web, but it still has than 100 million unique users, the company told USA Today.

Converge Technology Partners buying Key Information Systems

Toronto-based Converge Technology Partners unveiled its fourth solution provider acquisition since October 2017 with the purchase of Key Information Systems. With the acquisition, Converge Technology Partners gains a large boost to its cloud business, a closer relationship with IBM, and a large West Coast presence.

Nayamode buys Bluewave Communications

Nayamode has acquired Bluewave Communications, a design firm focused on digital. Nayamode, a Seattle-based firm that employs 100 and specializes in the Microsoft ecosystem, boasts a client roster that includes Samsung, CenturyLink, HP, Microsoft and VMware. Oakland, Calif.-based Bluewave, which employs 10, has served clients including Oracle, eBay, GE Software and Google.

ServiceNow buy VendorHawk

ServiceNow’s Now Platform is getting a shot in the arm through the company’s acquisition of Software-as-a-Service startup VendorHawk. VendorHawk’s technology optimizes customer SaaS usage, provides transparency and aims to help customers’ digital transformation initiatives. ServiceNow will integrate the Seattle-based startup’s technology inside its Now Platform.

HPE Pointnext buys RedPixie

Hewlett Packard Enterprise’s Pointnext unit has entered into a definitive agreement to acquire RedPixie, a United Kingdom cloud consulting company that builds and manages Microsoft Azure hybrid cloud solutions for financial services firms.

SearchLight Capital Taking Mitel Private in $2 billion Deal

Ottawa-based Mitel Networks Corp. has been acquired by London-based Searchlight Capital Partners for $2 billion. The cash transaction will see Mitel be taken off the public stock exchanges and become a private company. The acquisition comes less than two years after Mitel was foiled in its intent buy rival enterprise communications firm Polycom for $1.96 billion. That deal was killed when another private equity firm, Siris Capital, offered $2 billion in cash for Polycom.

Splunk Buying Phantom Cyber Corporation

The former CEO and founder of Phantom Cyber Corporation expects the company to further expand into the security and IT market after being acquired by Splunk Inc. “We had almost 10,000 community users, over 200 apps, and support for over 1,000 APIs. Splunk will allow us to supercharge that,” said Oliver Friedrichs in an April 9 blog post on Splunk’s website. Splunk, which produces software for searching, monitoring, and analyzing machine-generated big data, closed the acquisition of Phantom Cyber Corporation April 9. The goal is to speed up the adoption of security operations platforms in the market. They also expect to see their automation capabilities solving automation challenges outside of security.

Indeed Buying Workopolis

Jobs website Indeed will acquire Canadian jobs website Workopolis.com, Recruit Holdings Co. Ltd. announced. Recruit, one of the world’s largest staffing firms, owns Indeed. Staffing Industry Analysts’ Job Board Market Report: 2017 Update report ranks Workopolis as No. 30 on its list of largest job boards with US $34 million in 2016 revenue. It launched in 2000 and was previously owned by a 50/50 joint venture between Torstar Corp and Power Corp.


> 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/