IT Industry News – January 2017

A Little History of previous years’ Januarys

Five years ago, in January 2012, things were very quiet in M&A — former tech giant JDSU was back on the acquisition trail, even if just to pick up a small Vancouver-based company, Dyaptive Systems. Symantec paid $115 million for LiveOffice to help with its storage capabilities, Google bought a bunch more IBM patents, and Xerox picked up Laser Networks in the managed printing space. RIM (now Blackberry) also announced a change in leadership. Three years ago, in January 2013, Cisco bought mobile network software company Intucell for $475 million and sold its Linksys division to Belkin. The biggest dollar value deal was AT&T’s purchase of some of Verison Wireless’s airwaves for $1.9 billion. Other deals saw NCR buy video software ASTM company uGenius Technology; Canon Canada acquired long-time partner and document management company Oce Canada; NetSuite bought retail management systems company Retail Anywhere; and AVI-SPL bought Duocom-Duologik. January 2014 was an interesting month with a few big M&A deals. Google was an especially busy player, selling its Motorola Mobility handset unit to Lenovo for $2.9 billion but paying $3.2 billion for Nest Labs and the company also bought Bitspin. The other big deal saw VMware pay $1.17 billion for mobile device management company AirWatch. Other big names on the acquisition trail included Oracle, who bought cloud-based service delivery company Corente; Microsoft paid a reputed $100 million for cloud-based service company (seems to be a theme) Parature; Ricoh purchased IT service company Mindshift from BestBuy; and Hootsuite bought analytics company uberVu. In January 2015, the biggest deal was Hutchison offering more than $14 billion for O2. Other big dollar news saw Yahoo looking like it might be remaking itself, spinning off its $40 billion stake in Alibaba to become smaller, leaner and either buy or be bought! The final M&A activity involving a “B” was Telco equipment company Commscope offering $3 billion for TE Connectivities network business. There were also a number of very well-known companies out buying, and in no particular order: Amazon paid something like $300 million (approximate) for chip designer Annapurna Labs; Expedia bought its online travel competitor Travelocity for $200 million; Samsung paid $100 million for Brazil’s largest print company Simpress; Google paid about $100 million for mobile payments company Softcard; Facebook bought Wit.ai, a company that has a Siri like solution that can be embedded in other products; Dropbox bought CloudOn, a document editing and productivity tools company; Twitter paid somewhere between $30 million and $40 million for Zipdial, an Indian company that does some funky marketing thing with phone hang ups; and finally Microsoft made two acquisitions, startup text analytics company Equivo and in a departure from its history it bought open software company Revolution Analytics. There were no huge deals in January 2016, but there was plenty of activity with some of the household names out shopping. IBM bought video service provider Ustream; Microsoft bought game form learning tool MinecraftEdu; Apple bought “emotion recognition” company Emotient; and Oracle bought media web tracking firm AddThis. Toshiba bought an ERP solutions company Ignify, and a number of smaller deals included Juniper Networks buying BTISystems Inc.; FireEye bought iSight partners; Acceo Solutions bought Groupe Techna and SmartPrint bought LaserCorp’s Toronto-based managed print services business.

Which brings us back to the present

January 2017

The multi-billion-dollar deal of the month was Cisco’s purchase of app performance management company, AppDynamics for $3.7 billion. HP Enterprise purchased data center hardware provider, SimpliVity for $650 million. Microsoft acquired Montreal-based deep learning start-up Maluuba for an undisclosed sum. Google has announced plans to purchase Twitter’s mobile developer platform Fabric. Trello, the startup behind a leading task-management app has been purchased by Atlassian for $425 million. CRM giant, Salesforce bought Unity&Variety to enhance its productivity app service Quip. Managed Service Provider of data and database administration, Datavail, acquired Canadian IT channel leader Navantis.

Some non-M&A news in January included IBM announcing it broke the US record for number of patents granted in a single year — 8,088 to be exact. Avaya Inc. announced it filed for Chapter 11 bankruptcy protection as a result of accumulating debt from their major acquisitions in the last ten years. According to a report released by Gartner Inc., 2016 saw a decrease in the shipment of PCs, the lowest it has been since 2007.   

In this Issue:

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


> GENERAL INTEREST

General

PC shipments totaled 269.7 million in 2016, down 6.2% from 2015. Analysts at Gartner attribute the decline to weak holiday sales and changes to PC buying behavior. Lenovo held the top spot in PC shipments for 2016 with HP and Dell coming in second and third.  

The economy – Canada

Statistics Canada reported an increase in the employment rate of 1.2% for 2016 with 81,300 full-time jobs added in December alone. Despite the increase in employment, the unemployment rate increased 0.1% to 6.9%.

According to Staffing Industry Analysts, the Canadian Staffing Index fell 17% at the end of 2016.

CareerBuilder is forecasting healthy demand for temporary labor in 2017 as 51% of employers surveyed plan to hire temporary or contract workers and 63% of employers plan to transition temporary/contract workers to permanent roles in 2017.

TEKsystems, in their annual IT Forecast research, indicated that 43% of IT leaders anticipate an increase in contingent IT staff and 45% expect an increase in hiring full-time IT staff. Only one-third of IT leaders plan to increase salaries in 2017.

Intuit Canada released research projecting part-time freelancers, independent contractors and on-demand workers will make up approximately 45% of the workforce by 2020. The research indicated that more Canadians are leaning toward self-employment and work during retirement. 

The Robert Half Technology IT Hiring Forecast and Local Trend Report indicated that only 4% of Canadian CIOs plan to add staff to their IT departments in the first half of 2017.

A survey conducted by Express Employment Professionals showed that more than 50% of business leaders in Canada expect business performance to grow throughout 2017. Express Employment Professionals also released a hiring trends report indicating that 76% of businesses intend to hire new workers in the first quarter of 2017.  

In their Business Outlook Survey, the Bank of Canada has indicated optimism about hiring and investment has increased among Canadian executives for the first time since the 2014 oil crisis.

The economy – USA

TechServe Alliance reported that the number of IT jobs in the US only increased by 0.06% at the end of 2016.

The Robert Half Technology IT Hiring Forecast and Local Trend Report indicated that US CIOs plan to hire less IT staff in the first half of 2017 compared to the second half of 2016.

In a survey conducted by the American Staffing Association Workforce Monitor, 53% of the US adults surveyed believe the 2016 presidential election will have a positive impact on job creation.  

In the fourth quarter of 2016, US GDP grew at an annual rate of 1.9% according to the US Commerce Department.

In a survey conducted by the National Association for Business Economics, 59% of respondents anticipate a rise in wages over the next quarter. This has caused the NRI to increase to 56%.

The consumer confidence index fell to 111.8 (1985=100), the lowest it has been in 13 years according to the Conference Board. US Employment Trends also decreased slightly to 129.62 despite the fact the US added 156,000 jobs in December. The Conference Board also reported that CEO confidence rose from a level of 50 to a level of 65 at the end of 2016

The Conference Board’s US Leading Economic Index rose 0.5% at the end of 2016 to 124.6 (2010+100).

The ADP national employment report indicated US private-sector employment rose by adding 153,000 jobs from November to December, which fell short of the 170,000 projected. 

Based on the Federal Beige Book, CNBC reported that the Federal Reserve’s December increase was prompted by an increase in manufacturing, labor shortages and improved business investments.

The economy – Outside North America

Spain’s unemployment rate has fallen to its lowest level since 2009 to a rate of 18.6%, with an overall decrease of 2.3% over the course of 2016.

ManPowerGroup has forecasted that Spain may only be able to create approximately 400,000 a year, compared to the 500,000/year anticipated by the Spanish Government.

Switzerland has been ranked number one in the 2017 Global Talent Competitiveness Index, with Singapore coming in second. Notably, Sweden, Denmark, Finland and Norway all placed within the top ten in the index indicating Nordic education systems have adapted to meet the needs of each country’s economy.

The Ministry of Manpower indicated in their Labour Market Advanced Release 2016 that Singapore’s unemployment rate rose to 2.1%.

A report produced by Jobfeed showed that the number of job vacancies in the Netherlands increased to 25.6% in 2016.  

The Federal Statistics Office has reported that Germany has the second lowest unemployment rate among EU Member States with job vacancies climbing to 227 points at the end of 2016.

The Institute for Labour Market and Professional Research projects that Germany will see an improvement in the labour market and a decline in unemployment in 2017.

RTT News reported that Germany’s private sector growth slowed to a four-month low with the composite output index falling from 55.2 to 54.7.

The Central Statistics Office reported that Ireland’s unemployment rate fell by 7.2% at the end of 2016 – the lowest it has been since August 2008.

The Association of Professional Staffing Companies reported a decrease in demand for IT and finance professionals in the UK by 13% and 7% respectively. The decrease in demand for IT professionals was slightly offset by a 5% rise in the availability of permanent roles.

The Recruitment and Employment Confederation conducted research that indicates, in 2017, UK employers expect economic conditions to be more challenging yet they remain optimistic and anticipate an increase in business performance.

Data from the Ministry of Human Resources and Social Security reported by LiveMint indicated that China created 13 million new jobs in 2016.

Full-time and part-time employment have increased in Australia according to data released by the Australian Bureau of Statistics. Full-time employment in Australia increased by 7,000 individuals while part-time increased by 1,100.


> COMPANY NEWS

In 2016, IBM has surpassed the US patent record by more than 3,000 for a grand total of 8,088 patents granted in a single year. This translated to more than 22 patents granted per day in 2016 for inventions in cognitive computing or health, cloud, artificial intelligence, cybersecurity, etc.

In an effort to restructure its balance sheet, Avaya has filed for Chapter 11 bankruptcy protection and Bankruptcy Court approval of $725 million in debtor-in possession financing. Avaya has been pushed in this direction after taking on debt in their major acquisitions over the last decade. The Chapter 11 protection filing does not include the Canadian subsidiary pf Avaya.


> MERGER & ACQUISITION ACTIVITY

Cisco Buys AppDynamics

In an unexpected move, AppDynamics, an application performance management software company, has been acquired by Cisco for $3.7 billion. In December, AppDynamics had filed to go public to begin trading on the Nasdaq Global Select market. The acquisition will enable Cisco to offer customers unprecedented end-to-end insight across their technology stack, and supports Cisco’s transition toward software-centric solutions.

HP Enterprise Acquires SimpliVity

SimpliVity, a company that sells data center hardware that unites computing and storage has been purchased by Hewlett Packard Enterprise for $650 million in cash. Acquiring SimpliVity will assist HP Enterprise in achieving secure, highly resilient, on-premises infrastructure at cloud economics.    

Microsoft Acquires Maluuba

To get ahead in the artificial intelligence space, Microsoft made the strategic acquisition of Montreal deep learning start-up Maluuba. Microsoft’s Artificial Intelligence and Research Group can provide Maluuba with the technical resources to develop a deep learning platform modeled after the human brain. The sum of the acquisition has not been disclosed to the public.   

Google is Buying Fabric

As the dust settles on rumors of Google acquiring Twitter in 2016, Google has announced its purchase of Twitter’s mobile developer platform Fabric. Further speculation hints that the acquisition is a move toward strengthening Google’s weak social network capabilities.  

Atlassian Purchases Trello

Trello, the startup responsible for an eponymous task-management app, has been purchased by business software company Atlassian for $460 million. It is anticipated that Trello’s capabilities will complement Atlassian’s existing Confluence collaboration and JIRA project status tracking apps.

Salesforce Acquires Unity&Variety

Salesforce has made a strategic acquisition of software company Unity&Variety to improve the design capabilities of the existing Salesforce productivity app service Quip. The thinking behind the purchase is that Unity&Variety will lend their expertise to “shake up the design process at Quip.”  

Datavail Acquires Navantis

Datavail, managed services provider of data and database administration acquired Canadian IT channel darling Navantis. The acquisition will allow Navantis to draw on Datavail’s resources and increase their marketing and sales footprint in the IT channel space. 


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