February 2016 saw some action in the M&A world. The biggest deal saw HNA Group of China pay $6 billion for Ingram Micro. Two other billion dollar deals included Cisco paying $1.4 billion for IoT company, Jasper Technologies and a consortium of Chinese internet firms making a $1.2 billion bid for Opera. Microsoft was busy with a couple of acquisitions, Xamarin a cross platform mobile application development company, and Swiftkey which produces predictive keyboard technology. Another busy company was Alibaba Group which was investing in a bunch of companies, including a $100 million investment in Groupon, and smaller investments in microblogging site Weibo; software company Momo; augmented reality startup Magic Leap; Chinese retail chain Suning; and Singapore telco SingPost. Other companies of note out buying included IBM who bought digital agency Aperto and Blackberry acquired cybersecurity company Encription.
In other news, Apple is in a battle with the US government about privacy concerns after being ordered to develop a back door into its operating system. It was also interesting to see the projected growth in the mobile space with 5.5 billion users expected by 2020.
There wasn’t much good news on the economic front as both Canada and the US had a bit of a slow month. Canada lost about 5,700 jobs and the unemployment rate jumped a little to 7.2%. Various US indicators were down but everything is relative and general consensus is that things overall are still positive for the US economy.
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> General Interest> Company News
> Merger & Acquisition Activity
> Primary Sources
By 2020, there will be 5.5 billion mobile users around the world, 11.6 billion mobile-ready devices, the average mobile connection speeds will be more than three times faster than in 2015, and global mobile IP traffic will be multiplied more than eight times over, according to the VNI (Visual Networking Index) Global Mobile Data Traffic Forecast recently released by Cisco. The largest number of new users are expected come from Asia, Africa, and the Middle East, though North America and Western Europe will continue to have the most devices per user, according to the forecast. Another fascinating statistic is the increase in speed projected: From an average of 2 mbps in 2015 to 6.5 mbps in 2020. However, the growth will not be distributed evenly, with North America and European mobile users projected to have access to average speeds of 15.2 mbps and 14.1 mbps, respectively, by 2020, while the average speeds for the Middle East, Africa, and Latin America are projected to be below 5 mbps
Cybercrime was the second most common type of economic fraud suffered last year by Canadian organizations according to a new study from PricewaterhouseCoopers. Canadian organizations reported that 28% of the fraud they suffered in 2015 came through online sources, up four per cent from 2014. The leading cause of fraud was misappropriated assets (such as monetary assets/cash or supplies and equipment), at 62%. The report notes that this type of theft might be high because it’s the easiest to find. Other leading sources were procurement fraud, human resources fraud, bribery and corruptions, and mortgage fraud.
Economy – Canada
Employment in Canada was virtually unchanged in January, down 5,700 jobs but the unemployment rate edged up to 7.2%. In the 12 months to January, employment increased by 0.7% (+126,000). Over the same period, the unemployment rate rose from 6.6% to 7.2%, as the labour force grew at a faster pace than employment.
The Canadian staffing index fell in January, continuing a trend of moderate year-over-year declines. The index, which measures staffing activity in Canada, fell to a reading of 96 in January, down from a reading of 98 in January 2015. The index value of 100 corresponds to the size of the industry in July 2008, when the index began. Throughout 2015 and staring in 2016 there has been a trend of moderate year-over-year declines in the Canadian Staffing Index.
Economy – US
Forecasters revised down their estimate for growth in US GDP in the first quarter survey of professional forecasters by the Federal Reserve Bank of Philadelphia. GDP is expected to grow 2.1% in 2016. This is down from a projection made by forecasters in last quarter’s report that called for growth of 2.6%. Looking at just the first quarter of 2016, forecasters project GDP growth at 2.0%, down from the previous forecast of 2.5%. However, forecasters raised their estimate of job growth in 2016. They now estimate the US will add 204,300 jobs a month in 2016, up from the previous forecast of 197,000 jobs per month.
The Conference Board’s US leading economic index edged down in January but still suggests modest growth in the near term. The index fell 0.2% in January to a reading of 123.2 (2010 = 100), following a 0.3% decrease in December and a 0.5% increase in November.
The American Staffing Association’s index measuring employment in the US staffing industry was 92.65 for the week of Feb. 8 to Feb. 14. Temporary and contract staffing employment decreased 0.76% from the prior week and was 3.31% lower than the same week last year — one of 19 consecutive record high weeks that began in mid-January and continued through mid-May. Staffing employment during the past four weeks averaged 93.28, down 3.03% from the same period last year.
The Conference Board’s consumer confidence index for the US fell in February following a moderate increase in January. The index fell to a reading of 92.2 (1985=100), down from a reading of 97.8 in January. Consumers’ outlook for the labor market was also less optimistic. Continued turmoil in the financial markets may be rattling consumers, but their assessment of current conditions suggests the economy will continue to expand at a moderate pace in the near-term.
Apple has been ordered to work for the US government, without compensation, to undo the security system in one of its iPhones. The FBI won the order from a magistrate judge in Riverside, Calif. It directs Apple to create a custom version of iOS for an iPhone 5C that belonged to (but evidently was not managed by) the San Bernardino County Department of Public Health and was used by Syed Farook, one of the two shooters who killed 14 people in San Bernardino in December. The custom software, dubbed “FBiOS” by security researcher Dan Guido, is intended to disable iPhone security features that delete phone data if the device passcode is entered incorrectly 10 times and that limit the number of passcode entry attempts that can be made per second. Apple CEO Tim Cook said the company intends to challenge the order, stating that the “demand would undermine the very freedoms and liberty our government is meant to protect.” More to come in this case!
BlackBerry trimmed its headcount by about 200, letting loose employees both at its Waterloo, Ontario, headquarters and at a facility in Florida. BlackBerry didn’t specify which business units were impacted, but several reports suggest the cuts primarily affected the company’s smartphone business. Blackberry is still actively recruiting in those areas of our business that will drive growth. BlackBerry CEO John S. Chen has been on a cost-cutting mission ever since he replaced Thorsten Heins in November 2013. Many of the job cuts have focused on the company’s floundering smartphone business.
Microsoft is reputedly laying off “dozens” more employees associated with its mobile business. The cuts are happening in Finland and heavily targeting those involved in marketing. Microsoft Mobile Oy is the name of Espoo, Finland-based Microsoft’s mobile subsidiary, created following Microsoft’s purchase of Nokia’s handset business. Last year, Microsoft acknowledged it was cutting 2,300 jobs in Finland, and shuttering the Salo Lumia manufacturing unit. Before those cuts, there were 3,200 Microsoft employees in Finland. The cuts in Finland were part of Microsoft’s elimination of 7,800 jobs across the company, a move announced last July.
BlackBerry has acquired Encription, which provides cybersecurity services, and will build a unit around consulting. The move puts BlackBerry more squarely into security where it can leverage its software and intellectual property. Encription offers hardware and security technical consulting, penetration testing and white hat hacking services. Encription conforms with the United Kingdom’s highest security standards and has certifications in the CESG CHECK IT and ISO/IEC 27001. Encription has 40 employees and is based in Birmingham, U.K. The company has large enterprise and government customers, but works under non-disclosure agreements. BlackBerry has 15 employees today who focus on security services internally, but it’s immaterial to the company’s financial results. With the purchase, BlackBerry gets a chance to cross-sell its other software and hardware. However, the company noted that it will work with clients who aren’t BlackBerry customers.
Ingram Micro, the world’s largest technology distributor has been sold to HNA Group of China. HNA is multinational conglomerate with more than $90 billion in assets in industries such as aviation, financial services, real estate, and shipping. Initial reports suggest NHA has plans to leave Ingram Micro alone and run them as a subsidiary with headquarters remaining in Irvine, Calif. with Alain Monie the CEO to stay in charge and the Ingram Micro name and brand image will remain. The HNA Group also assured Ingram officials that it does not plan any closures or consolidation of offices, facilities or warehouses. The HNA Group went further to say it does not expect to close or combine offices as a result of this deal, nor do they have plans to integrate systems apart from what they are currently doing. The deal faces several regulatory hurdles such as the U.S. Committee on Foreign Investment who will no doubt look over this deal with a fine-tooth comb.
MNP LLP, a Canadian accounting firm, has acquired NCI, a Mississauga, ON-based solution provider. NCI specializes in cybersecurity solutions and services, including consulting, professional services, cloud and managed security, PCI compliance, and social engineering. In 2014, the company had a revenue range of $15-$20 million. Calgary, AB-based MNP provides services including assurance and accounting, consulting, corporate finance and taxes.
Microsoft has confirmed its purchase of Xamarin, a company focused on cross-platform mobile application development. Terms of the deal were not disclosed. Xamarin enables .NET developers to use Microsoft’s C# programming language to build fully native mobile apps that can run across platforms including iOS, Android, Windows, and Mac using a singular code base. Since it was founded in 2011, Xamarin has expanded to more than 350 employees and its 15,000+ customers span 120 countries and include business giants like Honeywell, Coca-Cola Bottling, Alaska Airlines, and JetBlue.
Microsoft is buying predictive keyboard technology company SwiftKey for a reported £250m, and will keep developing the iOS and Android versions of the app, as well as integrating the software with its own. SwiftKey’s eponymous keyboard app uses an algorithm, built by analysing huge amounts of text, to predict what you are trying to type, and what you will want to type next. SwiftKey estimates that its users have saved nearly 10 trillion keystrokes, across 100 languages, saving more than 100,000 years in combined typing time by using its predictive technology
Cisco announced plans to acquire IoT cloud provider Jasper Technologies, Inc. for $1.4 billion in cash and equity. Santa Clara, CA-based Jasper is privately held and provides a cloud-based IoT service platform for enterprises. Jasper’s technology connects various internet-enabled devices, including cars to jet engines and pacemakers to cellular networks. It is also designed to secure devices and collect data, automate management and speed deployment. “The proposed acquisition will allow Cisco to offer a complete IoT solution that is interoperable across devices and works with IoT service providers, application developers and an ecosystem of partners,”. It added that it would eventually add additional services such as enterprise Wi-Fi, security and analytics. Jasper has some 3,500 customers and some 27 service-providers.
Furthering a recent trend of vendors acquiring solution providers, the Canadian arm of Panasonic is buying Quickservice Technologies Inc. of St. Catharines, Ont. Quickservice is a solution provider focused on the security and point of sale area of the quick service restaurant sector. Quickservice have clients such as A&W and Dairy Queen. Recently, similar deals saw Hitachi buying Ideaca and Konica Minolta acquiring IT Weapons. The new company will be called “Quickservice Technologies, A Panasonic Company” and will operate as a separate division of Panasonic Canada when the acquisition closes, again similar to the arrangements with Ideaca and IT Weapons. Approximately 100 Quickservice staff will join the Panasonic Canada team.
Kaseya has announced its acquisition of Vorex, in what is seen as another instance in the industry of remote monitoring and management (RMM) software and professional services automation (PSA) coming together as one. In recent years, vendors have increasingly grown to offer both capabilities as the growth of MSPs drive the need to combine the solutions.
IBM has bought Berlin-based creative digital agency Aperto. Big Blue said it plans to use Aperto to build out IBM iX, the company’s design division that offers enterprises a bevy of creative services ranging from strategy, analytics and systems integration for commerce, mobile and wearable platforms. This is IBM’s second acquisition of a creative agency in a matter of days, following the acquisition of U.S.-based agency Resource/Ammirati. As for Aperto, the company has been active in the digital design space for the last 20 years, which essentially gives IBM a ready-made list of European clients including Airbus Group, Volkswagen and Siemens. IBM plans to keep all of Aperto’s 300-plus employees following the close of the deal during the first quarter of 2016. In many ways, the acquisition of Aperto shows how IBM is refining its suite of enterprise services. With Aperto under its belt, IBM has a stronger pitch to both existing and potential customers that may be looking for specialized design expertise when building mobile apps and other digital experiences. The deal also puts IBM in a comfortable position as it continues its highly coveted partnership with Apple, where experience-based design skills are core to duo’s offering of enterprise mobile apps.
Opera has received a $1.2 billion buyout offer from a consortium of Chinese Internet firms. The consortium includes Kunlun and Qihoo 360 and is backed by the investment funds Golden Brick and Yonglian. Opera’s board recommends the deal. “There is strong strategic and industrial logic to the acquisition of Opera by the Consortium,” Opera CEO Lars Boilesen said. “The Consortium’s ownership will strengthen Opera’s position to serve our users and partners with even greater innovation, and to accelerate our plans of expansion and growth.” Opera began looking for a buyer in August 2015, following slumping earnings after a steady loss of browser marketshare and slowing advertising sales. The company hired Morgan Stanley International and ABG Sundal Collier to help with the search. “Our Board has undertaken a careful review of the terms and conditions of the Offer and is unanimous in its recommendation. We commend the management team on the work they have done on behalf of the shareholders, employees and other Opera stakeholders,” Sverre Munck, chairman of Opera’s board, said. On behalf of the consortium, Yahui Zhou, CEO of Kunlun, said: “Opera is a well-recognized mobile internet company with great brand recognition and global impact. Under its excellent management team, Opera has made remarkable achievements in recent years in the fields of mobile browser and mobile advertising.”
ASICS, which makes athletic apparel and is best known for its running shoes, is buying FitnessKeeper, which owns run-tracking app Runkeeper. This is in line with competitors such as Under Armour, which went on an app buying spree and owns Endomondo, MapMyFitness and MyFitnessPal. Under Armour has now integrated the apps into UA Record and partnered with HTC. Adidias also acquired Runtastic. And now ASICS, one of the premier brands for runners, owns Runkeeper. This trend highlights how apparel companies are going digital as well as the connection that is required to market to athletes. Athletes track runs, diet and all sorts of metrics for performance. That data can factor into how products are churned out.
Alibaba Group has paid a little more than $100 million for a 5.6% stake in Groupon. It has not been smooth sailing for the discount site, with the startup going from courting acquisition opportunities from the likes of Google, to suffering in the spotlight since declaring a $750 million initial public offering in 2011. In October, Groupon’s then COO Rich Williams said the company was laying off approximately 1,100 workers in an attempt to restructure and streamline its operations. Williams also said at the time that Groupon had plans to cease operations in several markets internationally, including Morocco, Panama, The Philippines, Puerto Rico, Taiwan, Thailand, and Uruguay. Groupon had already bowed out of Turkey and Greece and sold off a controlling stake in Groupon India to Sequoia.
On the same day as its Groupon investment, Alibaba purchased 6 million shares from microblogging site Weibo for an approximate $1.1 million, and 740,000 shares in software firm Momo Inc. Earlier this month, the ecommerce giant led a $793.5 million funding round for augmented reality startup Magic Leap. The conglomerate also injected $4.63 billion into Chinese retail chain Suning for a 19.99 percent stake; invested $248.88 million for a 10.35 percent stake in Singapore’s telecommunications and postal service, SingPost; and in August increased its stake to 66 percent following a $206.45 million investment. Alibaba pumped $600 million into Travice Inc, the Chinese operator of taxi app Kuaidi Dachein January this year; took a $590 million minority stake in home-grown smartphone manufacturer, Meizu; previously invested $194 million for an undisclosed stake in China Business News; and also sank $118 million into Softbank Robotics Holdings.