A Little History of previous year’s Februarys
Five years ago in February 2013 Dell went private in a $24.4 billion deal that included a $2 billion investment by Microsoft. Oracle paid $1.7 billion for networking company Acme Packet Inc.; Rackspace bought big data company ObjectRocket; Telus was busy with two acquisitions, electronic medical records division of the Canadian Medical Association and digital forensics company Digital Wyzdom; HP also sold the Palm operating system to LG for their smart TVs. February 2014 was busy in M&A. Facebook made a big move with the $16 billion acquisition of Whatsapp. Comcast made a $45 billion play for Time Warner Cable and regulatory approval or otherwise is imminent; Oracle paid a reputed $400 million for data management platform company Bluekai; LinkedIn paid $120 million for online job search company Bright; and Klout was bought for about $100 million by Lithium Technologies. Google made a couple of acquisitions, online fraud company Spider.io and secure logon company Slicklogin. IBM bought database as a service company Cloudant; and Monster bought a couple of companies, social profile company Talentbin and job aggregation and distribution technology company Gozaic. Finally, Microsoft announced Steve Balmer’s retirement and appointed a new CEO, Satya Nadella. Three years ago February 2015 saw some interesting activity. The $6.3 billion merger of Staples and Office Depot and the $1.6 billion purchase of Orbitz by Expedia are two examples of sectors experiencing massive consolidation. There was a big buy in the communications and IT space with Harris paying $4.75 billion for Excelis to establish a 23,000 person company. There was a big data center play with UK based Telecity Group paying $2.2 billion for Interxion Holdings. Microsoft made a couple of acquisitions, paying $200 million for pen-tech maker N-Trig and $100 million for mobile calendar company Sunrise. Samsung bought a mobile payment company (competing with Apple pay), LoopPay. Also out buying was Twitter which picked up Niche, a network of social media creators. There were a number of interesting deals in Asia, including Sapdeal buying luxury fashion eStore Exclusively; Foodpanda made six acquisitions of online meal delivery services to establish itself as a powerhouse in that space. Australian job board OneShift bought Adage, which is a job board serving people over 45. In February 2016 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. Last year February 2017 saw very little M&A action. Nokia paid $371 million for Finnish telecom software company Comptel, as it reinvented itself, and Apple picked up an AI startup company RealFace. Another company in the news, but for the wrong reasons was Samsung which is in the middle of a significant bribery scandal.
Which brings us back to the present
February 2018 was a very active month in M&A, with lots of deals. The biggest saw more consolidation in the telco space with US based GTT paying $2.3 billion for London headquartered Interroute, thus expending its global footprint. Security companies were a theme in this month’s acquisitions and you will spot several in the following list. Cybersecurity firm Phishme was bought with $400 million of private equity money; Splunk paid $350 million for Phantom Cyber Corp; and Proofpoint paid $225 million for Wombat Security Technologies. Other deals saw LogMeIn pay $342 million for Jive Communications; Carbonite pay $146 million for Mozy; and Red Hat paid $250 million for Core OS. Some of the household names that were also out making deals included Oracle, Google, Opentext, Avaya and Citrix. All in all the busiest M&A month I have seen in a while.
Samsung was in the news for passing Intel in size within the chip manufacturing market for the first time, which is much more positive press than the scandal from a year ago. The fourth quarter of 2017 saw the first decrease in smartphone sales since 2004. It is suggested that cybercrime is now costing $600 billion annually which is up about a third in the last three years.
The Canadian market took a hit in January, losing 80,000 jobs (50,000 in Ontario). The stark difference in tax treatment between the Canadian budget and the US tax reform moves, together with NAFTA negotiations are causing some concern in Canada. The US however continues to enjoy continuing job growth and almost every indicator is positive. Around the world most countries are enjoying job growth and positive indicators. One exception to all that positivity is in the UK where the uncertainly around Brexit seems to be having an impact.
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The fourth quarter of 2017 saw worldwide sales of smartphones decline for the first time since 2004, according to Gartner. There are two main factors why this happened: Upgrades from feature phones to smartphones have slowed down to a crawl, and smartphone users are choosing quality models and keeping them longer. Despite seeing a 3.6% year-on-year decline in units, Samsung still reigned supreme and topped Apple as the top global smartphone vendor
Cybercrime may now cost the world almost US$600 billion a year, up from US $445 billion three years ago. That estimate comes from the latest Economic Impact of Cybercrime report by the Washington-based Center for Strategic and International Studies and McAfee. And –despite regular headlines announcing a new data breach — the report says cybercrime isn’t the most lucrative of illegal activity. Beating it are government corruption and narcotics, citing numbers from the International Monetary Fund.
A report from the “Pitchbook” suggests that VC investment in blockchain startups reached $911 million in 2017, an 88% increase over the previous year.
Economy – Canada
The tech industry continues to be Canada’s most trusted, but that trust is slowly declining, according to the latest Edelman Trust Barometer report. Since 2014, Canadians’ trust in the tech sector has dropped from 74 points to 71. It’s a trend that can be seen across all sectors in Canada – except for the energy sector, which saw a three point increase since 2014.
Canada named five winners for the $950 million Innovation Supercluster Initiative. This is a Liberal initiative designed to stimulate innovation in Canada.
Following two months of increases, Canada lost 88,000 jobs in January from December to a total of almost 18.6 million jobs. A loss of 137,000 part-time jobs in January offset a gain of 49,000 full-time jobs. The unemployment rate edged up to 5.9% in January from 5.8% in December. The job loss was far worse than market expectations, which were for an increase of 10,000 positions. The largest employment declines were in Ontario and Quebec. There were also decreases in New Brunswick and Manitoba.
The number of temporary foreign workers present in Canada increased to 310,000 in 2015 from 52,000 in 1996, according to Statistics Canada. Almost 90% of temporary foreign workers who were still in Canada after 10 years had obtained permanent resident status, having made the transition from temporary foreign worker to landed immigrant.
The Canadian staffing index, which measures staffing activity in Canada, rose 6% in January on a year-over-year basis to a reading of 106. On a month-over-month basis, the index rose 4% in January.
Economy – US
Job growth in the US shows no sign of a slowdown, according to The Conference Board’s Employment Trends Index, which rose in January to a reading of 106.93 after an increase in December as well.
Economic activity in the US nonmanufacturing sector accelerated in January, according to the Institute for Supply Management’s nonmanufacturing index which was the highest it has been in more than 12 years.
Economic activity in the manufacturing sector expanded in January but at a slightly slower pace than December, according to the Institute for Supply Management’s purchasing managers index for US manufacturing. January’s index reading was 59.1, down 0.2 of a percentage point from December’s reading of 59.3. “Employment expansion remains strong, but difficulties across the supply chain continue to constrain production output,” said Timothy Fiore, chair of the Institute for Supply Management manufacturing business survey committee.
More than half of IT employers expect to increase headcount in 2018, according to the 2018 US Salary Guide from Hays plc. However, new technology is outpacing training, causing a tech skills shortage that is affecting three-quarters of IT employers.
The Conference Board’s consumer confidence index increased in February, following a modest increase in January. The index rose to a reading of 130.8 (1985=100) from 124.3 in January.
The US Bureau of Economic Analysis lowered its estimate of growth in US real gross domestic product to 2.5%. The bureau’s estimate is its “second” estimate; its previous “advance” estimate had real GDP growth at 2.6%. Real GDP for the US increased 3.2% in the third quarter.
The Conference Board’s US Leading Economic Index rose 1.0% in January to a reading of 108.1 (2016 = 100), following increases of 0.6% in December and 0.4% in November.
The US economy’s growth outlook is stronger now than three months ago, according to the first-quarter edition of the Survey of Professional Forecasters released by the Federal Reserve Bank of Philadelphia. The forecasters now predict real GDP will grow at an annual rate of 3.0% this quarter, up from the previous estimate of 2.4%.
The forecasters also raised their estimate for job growth in 2018, estimating the US will add 175,100 jobs per month in 2018, up from 163,400.
Economy – outside North America
South Africa’s jobless rate decreased by 1.0% in the fourth quarter of 2017 to 26.7%, when compared to the previous quarter, according to the results of the Quarterly Labour Force Survey from Statistics South Africa.
New Zealand’s labour market showed improvement in the December quarter. The December 2017 quarter showed that labour demand is steady, and employment was up 0.5% over the quarter leading to 2.61 million people in employment. Employment across sectors and regions in New Zealand is expected to grow by 2% per year, or 153,000, over the next three years to March 2020, according to a report from the Ministry of Business, Innovation and Employment.
The seasonally adjusted unemployment rate in New Zealand fell to 4.5% in the December 2017 quarter, down 0.8% from last year and 0.1% from last quarter, according to figures from Statistics New Zealand.
The jobless rate in Australia stood at 5.5% in January, down 0.1% on a seasonally-adjusted basis from the previous month, according to figures from the Australian Bureau of Statistics.
The unemployment rate in South Korea stood at 3.7% in January, steady year-on-year, according to figures from Statistics Korea.
The Organisation for Economic Co-operation and Development unemployment rate fell by 0.7% in December 2017, to 5.5%, compared to December 2016. According to the OECD, the 5.5% figure is 0.1% lower than the level just before the financial crisis in April 2008, reflecting an increase in the active population, with the total number of unemployed people, at 34.8 million, still remaining 2.2 million above its pre-crisis level.
London saw a decrease in the number of jobs available in January when compared to the previous year, according to the latest Morgan McKinley London Employment Monitor. In the same month, the number of professionals seeking jobs in London also fell by 27%, year-on-year.
The fourth quarter of 2017 saw an increase of 1.5% in employment for Germany, according to figures from Destatis, the federal statistical office. There were 44.6 million people in employment in December 2017, which was 1.5% more than the previous year.
The euro area (EA19) seasonally-adjusted unemployment rate stood at 8.7% in December 2017, down from 9.7% in December 2016. This remains the lowest rate recorded in the euro area since January 2009, according to figures from Eurostat, the statistical office of the European Union.
The EU28 unemployment rate was 7.3% in December 2017, down from 8.2% in December 2016 and the lowest rate recorded in the EU28 since October 2008.
The majority of Japanese firms are currently facing labour shortages according to survey data from the Ministry of Finance. The seasonally adjusted unemployment rate in Japan fell to 2.8% in December from 3.3% last year, according to figures from the Ministry of Internal Affairs and Communications.
The labour market in Singapore continued to improve in the fourth quarter of 2017 ending December 2017, according to the Ministry of Manpower. The total employment (excluding Foreign Domestic Workers) grew in the fourth quarter of 2017 (10,700), after contracting in the first three quarters of the year.
The unemployment rate in Norway fell to 4.1% for the period from October to December, compared to 4.7% in the same time last year, according to Statistics Norway.
The jobless rate in Hong Kong stood at 2.9% for the period from November 2017 to January 2018, steady from the previous period of October to December 2017.
Uncertainty is impacting staffing decisions in the UK as 35% of employers think that economic conditions in the country are getting worse, while 21% say they are improving, according to the latest JobsOutlook survey from the Recruitment & Employment Confederation (REC). The JobsOutlook survey, which polled 600 employers, showed that the net balance of confidence in hiring and investment decisions has fallen to eight, which is the lowest since the referendum.
More than a third of workers aged 55 and over take on gig economy jobs to help them ease their way into retirement, according to new research from insurance firm Zurich UK.
Samsung toppled Intel as the dominant company in chip manufacturing in 2017, according to the companies’ newly released financial reports. The change – which marks the first time since 1992 that Intel is not in the top spot – stems in part from the fact that memory prices were higher due to a supply shortage.
OpenText Corp. has purchased Hightail Inc., a U.S company that specializes in cloud-based file sharing. Hightail, formerly known as YouSendIt, has approximately 5.5 million customers globally, many of whom work in the enterprise field. OpenText says the acquisition expands their content collaboration market through Hightail’s existing user base.
Avaya announced the acquisition of Spoken Communications, a sign of recovery after leaving Chapter 11 bankruptcy. The deal will include more than 170 patents and patent applications.
ConvergeOne is buying Arrow Systems Integration – an enterprise communications-focused subsidiary of Arrow Electronics – for $36 million. Buying Arrow SI will allow ConvergeOne to strengthen its foothold in the United States, broaden its collaboration and cloud services offerings and add vertical expertise in health care and government agencies at the state, local and federal levels.
Google is paying $50 million for LogMeIn’s Xively platform, giving the search giant a mature IoT platform. Google Cloud will leverage Xively’s enterprise IoT platform to accelerate customers’ timeline from IoT vision to product.
Oracle plans to boost the application and network protection around its cloud services by purchasing security startup Zenedge. The Redwood Shores, Calif.-based software vendor said its acquisition of Aventura, Fl.-based Zenedge would make it easier for enterprises to adopt cloud services without compromising performance, cost, control or security. Zenedge’s web application firewall and DDoS mitigation products help customers secure their applications, networks, databases and APIs from malicious internet traffic.
Citrix Systems has acquired Cedexis, a Portland, Ore. software developer that optimizes application performance and content delivery across hybrid and multi-cloud environments. Cedexis technology dynamically manages network traffic across the Internet to smooth and accelerate the flow of data, making it a good fit for the Fort Lauderdale, Fla.-based virtualization giant.
In a move that will expand on video conferencing market leader LogMeIn’s unified communications (UC) and collaboration strategy, the company is paying $342 million , plus up to $15 million in incentives, for cloud-based UC provider Jive Communications. The purchase will add Jive’s portfolio of cloud-based phone systems and UC solutions to its own existing suite of collaboration and video products. These include GoToMeeting, GoToWebinar, OpenVoice. The deal will also bring Jive’s substantial channel expertise to the table.
Unitas Global acquired cloud consulting firm Solinea as the company continues to enhance its hybrid cloud strategy and boost enterprise sales. The acquisition of Solinea strengthens Unitas’ ability to provide customers with seamless cloud adoption for end-to-end hybrid cloud solutions.
Premier BPO, a global business process outsourcing company, has acquired dinCloud, a cloud platform developer that’s focused on the virtual desktop and cloud infrastructure market.
Computer Task Group (CTG) has acquired a Paris, France-based IT consulting company as the staffing services provider looks to establish an expanded presence in European markets.
Cloud-based storage vendor Carbonite’s $146 million planned acquisition of rival Mozy from Dell Technologies will create new opportunities for channel partners from both companies, according to Carbonite executives. Mozy, was founded in 2005 and was acquired by EMC in 2007. It became part of Dell when Dell bought EMC in 2016. Both Mozy and Carbonite started as consumer-focused cloud-based storage companies, but have since evolved to where the business segments and channel partnerships form the bulk of their businesses.
Proofpoint plans to provide the industry’s first-ever integration of market-leading protection and awareness offerings through its $225 million purchase of Wombat Security Technologies. The Sunnyvale, Calif.-based vendor said the deal would allow it to fuse its advanced threat protection capabilities with Pittsburgh-based Wombat’s realtime phishing simulation and cybersecurity awareness and training.
Data protection and data management technology developer Rubrik is looking to expand into managing the vast outputs from big data and NoSQL databases with a planned acquisition of Datos IO.
Red Hat announced that it is acquiring CoreOS, a San Francisco-based startup, for $250 million. In what is considered to be one of the largest acquisitions made by Red Hat, this deal further consolidates the position of the company in the open source market. CoreOS has been the pioneer of container-optimized Linux operating system.
U.S. telecommunications company and internet provider GTT Communications is buying European fiber network operator Interoute in a deal worth $2.3 billion.
London-based Interoute operates one of Europe’s biggest fiber networks and associated cloud services, spanning more than 70,000 kilometers and 29 countries, according to a Bloomberg report last year that outlined the company’s plan to find a buyer.
Cybersecurity startup PhishMe has been acquired by an undisclosed syndicate of private equity firms and rebranded as Cofense, with the company stating that the deal valued it at around $400 million. Leesburg, Virginia-based PhishMe provides tools that help employees recognize malicious phishing emails.
Machine data analytics software provider Splunk is acquiring Phantom Cyber Corp., a developer of security orchestration, automation and response (SOAR) software, for $350 million.