IT Industry News – April 2015

> GENERAL INTEREST

Gartner has cut its growth predictions for global IT spending in 2015, with a strong US dollar the reason for a $48 billion reduction in investment compared with last year. IT spending growth is forecast at 1.3% for 2015, down from its earlier forecast of 2.4%. As a result, total spending on everything from datacenters to devices is expected to reach $3.66tn, down from $3.71tn last year.

Worldwide semiconductor market revenue hit $340.3 billion in 2014, increasing by 7.9% over the previous year’s tally of $315.4 billion, according to Gartner. The information technology research firm’s latest report shows that the world’s top 25 semiconductor vendors’ combined revenue increase outstripped the global total, seeing an 11.7% boost in revenue growth during the year. The top 25 vendors in the industry, including Intel, Samsung, and Qualcomm, made up 72.4% of the total market revenue, up from 69.9% in 2013.

According to Strategy Analytics, for the first quarter of this year, Samsung is once again the top smartphone vendor. It shipped an estimated 83.2 million units, and owned a 24.1% share of the market. Apple meanwhile shipped 61.2 million units, earning, a 17.7%. While Samsung’s share is still well down on the 31.2% it held a year ago, the company nonetheless reclaimed its edge over Apple after the two companies both notched up a 19% share for the last quarter of 2014. Worldwide, 345 million smartphones were shipped during the first quarter, up 21% on the 285 million that shipped a year ago.

According to a new forecast from IDC Canada, the Canadian Internet of Things (IoT) addressable market will be worth more than $6.5 billion by 2018. EDC expects the IoT market to really take off in Canada in 2015, with spending rising from $2.88 billion in 2013 to $6.5 billion in 2018.

According to IDC’s Worldwide Quarterly PC Tracker for Q1, 68.5 million PCs were shipped globally, a decline of 6.7%. It’s the lowest recorded volume since Q1 of 2009, and comes after a strong second half of 2014 for PC shipments fuelled by the end of the Windows XP refresh activity and strong consumer activity. Lenovo shipped 13.4 million units, growing its market share by 3.4% to capture 10.6% of the market. Not far behind was HP with 12.9 million units shipped, growing by 3.3% but actually holding 19% of the market, thanks to strength in the US and EMEA. Dell in third place saw its shipments decline by 6.3% and Acer in fourth spot also dropped by 7%.

The economy – Canada

Employment in Canada rose by 28,700 in March from February, driven by gains in part-time work, according to Statistics Canada. The number of full-time jobs fell by 28,200 while part-time jobs rose by 56,800. Total employment in Canada was approximately 17.9 million in March, and the Canadian unemployment rate remained 6.8%.

The RBC Canadian manufacturing purchasing managers’ index posted below the neutral 50.0 value for the second consecutive month, representing the first back-to-back deterioration in overall business conditions in the survey’s four-and-a-half year history. The index edged up to a reading of 48.9 in March from 48.7 in February. Additionally, the average reading for the first quarter as a whole, 49.5 is the weakest since the survey began in late 2010.

The Conference Board of Canada’s consumer confidence index fell 13.6 points to 94.7 in April (2014 = 100), following a rebound in March. "Relative to last month, Canadians were more pessimistic about their current and future finances, their willingness to make a major purchase, and future job prospects in April. The increased pessimism about the state of the job market was felt everywhere, but most notably in Ontario and Alberta.

The Canadian Staffing Index, a measure of staffing activity in Canada, rose 15% sequentially to a reading of 106 in March from the February index value of 92. However, the index still edged down year-over-year from 107 in March 2014. The index value of 100 corresponds to the size of the industry in July 2008, when the index began.

The economy – US

Large-company CFOs believed the US economy was on a strong growth path in the first quarter, according to Deloitte LLP’s first-quarter CFO Signals survey. For the first quarter, 59% of CFOs describe North American conditions as good or very good, down slightly from last quarter’s very high 63%. Only 1% described it as bad, the lowest level since Deloitte began measuring economic sentiment in 2Q13.

The Conference Board’s US employment trends index edged down in March to a reading of 127.65 from 127.77 in February. The March reading is up 5.6% from the same month a year ago. "The growth in the employment trends index slowed down in the first quarter of 2015," said Gad Levanon, managing director of macroeconomic and labor market research at The Conference Board. "The combination of the disappointing March employment report and the recent weakness in the ETI suggests that the likelihood of a slowdown in employment has increased. Even so, it is unlikely that job growth in the second quarter would fall much below the trend of 200,000 jobs per month."

Economic activity in the US non-manufacturing sector expanded at a slightly slower pace in February while employment growth edged up, according to the Institute for Supply Management’s non-manufacturing index. ISM’s non-manufacturing index fell in March to a reading of 56.5 from February’s reading of 56.9. Readings above 50 indicate growth. The reading matched the median forecast of 71 economists surveyed by Bloomberg. The employment portion of the index edged up to a reading of 56.6 in March from February’s reading of 56.4 and indicates growth for the 13th consecutive month.

The number of IT jobs in the US rose 0.3% in March from February to almost 4.8 million, according to the TechServe Alliance. On a year-over-year basis, the number of IT jobs rose 5.1% in the US, adding 234,700 IT workers. The rate of engineering job growth slowed in March, edging up only 0.1% from the previous month to more than 2.5 million jobs. The number of US engineering jobs rose 1.4% year-over-year from March 2014, adding 34,200 engineering workers.

CEO confidence fell in the first quarter after edging up in the fourth quarter. The Conference Board and PwC Network’s measure of CEO confidence fell to a level of 57 in the first quarter from 60 in the fourth quarter. A reading of more than 50 reflects more positive than negative responses. "Optimism among CEOs retreated in the first quarter of 2015, and while expectations for growth prospects in the US remained positive, they were less favorable than last quarter. Meanwhile, expectations for Europe, China and Brazil continued to decline," said Lynn Franco, director of economic indicators at The Conference Board. CEO sentiment in the US and India remains upbeat, but CEOs’ assessment of Brazil has grown more pessimistic since last quarter. Looking ahead, expectations for India and the US remain favorable, while CEOs remain pessimistic regarding the outlook for Europe, China, Japan and Brazil.

The US had 11,400 more temp jobs in March than February, an improvement over the month-over-month declines in January and February, according to seasonally adjusted numbers from the US Bureau of Labor Statistics. On the other hand, the US overall added only 126,000 nonfarm jobs month-over-month, much lower than the average of 258,000 since March 2014. The US unemployment rate was unchanged at 5.5%, the lowest rate since the spring of 2008. The college-level unemployment rate, which can serve as a proxy for professional employment, fell to 2.5% in March from 2.7% in February.

US manufacturing and service sectors are expected to reach four-year highs for hiring rates in the month of April, according to the leading indicators of a national employment report from the Society for Human Resource Management. Hiring expectations in US manufacturing rose for the 13th straight month in April when compared with the same month in the previous year, and service-sector hiring expectations also increased.

The Institute for Supply Management’s purchasing managers’ index for US manufacturing decelerated to a reading of 51.5 in March from February’s reading of 52.9. March’s reading is the lowest since May 2013, according to Bloomberg, but any reading above 50 typically indicates growth.  The median forecast in a Bloomberg survey of economists was 52.5. The employment portion of the ISM’s manufacturing index decreased to a reading of 50.0 from 51.4 in February. 

US real GDP edged up at an annual rate of only 0.2% in the first quarter, according to the "advance" estimate released today by the US Bureau of Economic Analysis. It increased by 2.2% in the fourth quarter. "While the reported 0.2% partly reflects temporary factors, such as port closings and bad weather, and underestimates the current trend in the US economy, we do think that economic growth is weakening," The Conference Board said in a statement. "The downward pressure on profits, the large drop in oil related investment and the strong dollar are holding back the US economy. While the weak consumption of goods was partly a result of bad weather, it seems that most of the boost from oil prices already took place in the previous quarter. Despite extremely low interest rates, residential investment continues to grow unusually slowly, partly a result of very weak household formation."

The American Staffing Association’s index measuring employment in the US staffing industry edged up 0.96% for the week of April 6 to April 12 compared with the same week last year. The index value rose to 96.46, a record high for the 15th week of the year.

The US economic outlook remains strong despite a weak first quarter, according to the National Association for Business Economics in the release of its first-quarter business conditions survey of 77 NABE members. "Over the past three months, the prices of crude oil and the dollar have not had a material impact on the outlook for the majority of respondents’ firms," said NABE President John Silvia, chief economist at Wells Fargo. "Due to unusually harsh weather and dock strikes on the West Coast, growth in the first quarter appears to be an outlier within the broader economic outlook." The report also cited a modest increase in hiring; 35% of survey respondents reported additional hiring at their firms in the first quarter, up from 34% in the fourth quarter report and 28% in the first quarter of 2014. NABE is a professional association for business economists and others who use economics in the workplace.

Employers plan to hire 9.6% more new college grads from the class of 2015 for their US operations than they did from the class of 2014, according to Job Outlook 2015 Spring Update survey by the National Association of Colleges and Employers. That’s up from projections in fall 2014, when employers said they expected to increase their college hiring by 8.3%.

The outlook among American workers as measured by Randstad’s US employee confidence index rose in the first quarter to the highest level reported since the survey’s inception in the third quarter of 2004. The index rose to a reading of 62.3 in the first quarter and reflects very strong confidence levels among workers in the overall economy and in the job market

The economy – Outside Canada & US

Mexico’s economic expansion is unlikely to improve in the coming months, according to The Conference Board. The leading economic index for Mexico was unchanged in February following sharp declines in the previous two months. Gains in oil and stock prices were offset by large negative contributions from net inefficient inventories, the construction component of industrial production and real exchange rate.


> COMPANY NEWS

Enterprise data integration vendor Informatica is going private in a deal valued at about $5.3 billion. Permira, a private equity firm, and the Canada Pension Plan Investment Board will acquire Informatica for $48.75 a share. Informatica had been exploring strategic alternatives. Sohaib Abbasi, CEO of Informatica, said the company will maintain its strategy to be a cog in the so-called "data-ready enterprise." Informatica has annual revenues exceeding $1 billion, has more than 5,000 customers and 3,600 employees. The company plans to grow via a focus on cloud integration, master data management, analytics and integration and security.

Microsoft laid off "hundreds" of employees in what is expected to be the last wave of the 18,000 planned job cuts officials announced last year. A Microsoft spokesperson confirmed those cut were part of Microsoft’s IT group. The Times quoted an e-mail from Microsoft chief information officer Jim DuBois, who said the IT cuts were designed to "remove role overlap, optimize activities and functions, align disciplines with the rest of Microsoft, and, perhaps most importantly, reshape IT for the skills we need to transform."

Cloud-based payroll software provider ZenPayroll raised a $60 million Series B round led by Google Capital. Since its founding in 2012, ZenPayroll has enjoyed considerable success with investors, with early funding from the CEOs of Yelp, Dropbox, Yammer, and Box, as well as Y Combinator. The new round of funding, which includes participation from Emergence Capital Partners, Ribbit Capital, General Catalyst, Kleiner Perkins, Caufield & Byers and Google Ventures, brings the San Francisco-based startup’s total financing to $86.1 million, with an estimated value of $560 million.


> MERGER & ACQUISITION ACTIVITY

LinkedIn announced its largest acquisition to date, paying $1.5 billion for lynda.com. Founded in 1995, lynda.com is a subscription-based online learning portal, where members can focus on a range of business and technology skill sets. The website also offers a premium subscription for members in corporate, government and educational organizations. LinkedIn brings approximately 350 million people, who can now access lynda.com’s premium library of skills-based courses.

3D Systems acquired Easyway, a Chinese company which specializes in 3D printing sales and services. Easyway operates across the country and in regions including Shanghai, Wuxi, Beijing, Guangdong and Chongqing. The firm brings 3D sales and services to industries across China including the automotive, medical and consumer fields. Easyway serves corporate clients such as VW, Nissan, Philips, Omron, Black & Decker, Panasonic and Honeywell.

LinkedIn has acquired predictive insights startup Refresh, a Mountain View, California-based operation known for its eponymous iOS app that helps users brush up on key details about people they may not follow regularly. More specifically, the app synchs with a user’s LinkedIn or Facebook account and analyzes profiles, statuses and events across the networks to create a dossier on a particular person, which can then be used to prep for a job interview or a business meeting, for example. The deal marks LinkedIn’s second acquisition this month, following its purchase of the online recruiting and talent acquisition platform Careerify. Founded in 2011, Refresh previously raised $10 million in financing from Redpoint Ventures, Charles River Ventures and Foundation Capital in October of 2010.

Salesforce.com added mobile-based two-factor authentication to its stable of identity and access control technologies with the acquisition of Toopher, a start-up from from the Austin (Texas) Technology Incubator. Toopher, which immediately stopped selling its products after the announcement, uses a smartphone’s location-awareness capabilities to provide two-factor authentication. Toopher counts LastPass, MailChimp, and the universities of Oklahoma and Texas as its customers. Salesforce over the past few years has been building out a collection of identity and access management tools. Toopher was founded in 2011 by University of Texas PhD student Evan Grim, who became CTO, and one of the school’s adjunct professors of finance, Josh Alexander, who served as CEO. Toopher was funded by Alsop Louie.

Markham-based IT provider BDO Solutions announced a merger with Systemgroup Inc. Mississauga-based Systemgroup will merge with the technology division of BDO Canada, a national accounting and advisory firm which is in turn an independent member of UK-based BDO International Limited.

Nokia will buy ailing French telecom company Alcatel-Lucent for around 15.6 billion euros ($16.5 billion) through a public exchange of shares in France and the United States, in a bid to become a leading global networks operator. Though Alcatel-Lucent has been racking up billions of euros of losses since its creation in 2006, Nokia seems to believe it can cut costs and hopes the deal will give it scale in the market of providing the networks that mobile phones use. The combined company, known as Nokia Corp., will be based in Finland with "a strong presence in France," Nokia said.

Microsoft acquired mobile business intelligence service Datazen, a mobile business intelligence and data visualization service. The move will allow Microsoft to deliver Power BI across mobile devices, including iOS and Android. There are a few major trends driving business these days. Two of them are mobile devices and big data analytics. Microsoft recognizes the value of helping customers to access business analytics from mobile devices. It has been pushing the mobile first/cloud first mantra since Satya Nadella took the helm, and the Datazen acquisition will enable Microsoft to raise the bar and provide even greater value.

BlackBerry has purchased a file-sharing security company in order to bolster its enterprise mobile management capabilities. The Canadian mobile communication solutions firm did not disclose how much it is paying for WatchDox Ltd. but some media reports pegged the amount at around US$150 million. Headquartered in Palo Alto, Calif., WatchDox maintains a research and development facility in Petah Tikva, Israel. The company provides secure collaboration and mobility tools to various industries including government, healthcare, financial services, manufacturing, law, and media. BlackBerry said WatchDox technology will be a value-added service to complement the BlackBerry EMM portfolio and will be included in its multi-operating system solution, BES12. BlackBerry also intends to use the WatchDox R&D facility as the basis of its own security-focused R&D center in Israel.

Cloud-based financials, enterprise resource planning and omnichannel commerce vendor NetSuite paid $200 million for Bronto Software. Bronto is a privately-held cloud-based commerce marketing company. Bronto provides cloud-based email marketing services through its commerce marketing automation platform to brands such as Armani Exchange, Timex and Trek Bikes. Bronto’s solution will complement NetSuite’s SuiteCommerce platform, a cloud-based omnichannel B2B and B2C commerce platform used by more than 3,000 brands to drive their commerce strategies across point-of-sale, ecommerce and call center.

French outsourcer and consulting firm Capgemini announced plans to acquire IGATE, a rival firm based in Bridgewater, New Jersey, for $4 billion. The all-cash deal forges an alliance between two giants in the IT consulting space — with combined 2015 revenue estimated at $13.5 billion — and marks the largest acquisition for Capgemini since it bought the consulting business of Ernst & Young 15 years ago. Looking at the bigger picture, the deal helps both companies challenge tech giants such as Accenture and IBM for a larger slice of American market share. Capgemini said the deal would make North America the company’s largest market by revenue while also bolstering key businesses in application and infrastructure services as well as BPO and engineering services. Capgemini noted that IGATE’s focus on the financial services sector is complementary to its own businesses targeted at the retail, healthcare and manufacturing industries. Once completed, an estimated 50,000 employees will be working in the region. In addition to the geographic and portfolio perks, the deal also widens Capgemini’s client base with existing IGATE customers like General Electric and Royal Bank of Canada.

ARM has created a new Internet of Things (IoT) portfolio under the name Cordio after snapping up talent and technology from two companies that specialise in low-powered wireless hardware. The UK chip designer has acquired two US firms, Wicentric and Sunrise Micro Devices, to launch a new portfolio of low-power radio IP systems designed for power-constrained consumer wearables, such as smartwatches.


> PRIMARY SOURCES:

IT World Canadahttp://www.itworldcanada.com
Ottawa Business Journalhttp://www.ottawabusinessjournal.com
ZDNethttp://www.zdnet.com
Canada IThttp://www.canadait.com