|By Kevin Dee, Chairman of the Board at Eagle|
This is my 30,000-foot look at events in the Tech space for May 2019. What you see here is a précis of the monthly report I produce, which will be available in more detail at the News section of the Eagle website, where you will also find back issues.
A Little History of May in previous years
Five years ago, in May 2014, AT&T paid $50 billion for DirectTV and Apple paid $3 billion for Beats. Google continued to invest in its Android strategy, this time with a strategy company, Divide. Other acquisitions saw Seagate pay $450 million for some flash capability from Avago (the LSI divisions); GE bought cyber security firm Wurdtech; EMC bought a flash start-up DSSD; Time Warner bought YouTube video network FullScreen; and SAP bought behavioral target marketing company SeeWhy.
May 2015 saw some very large deals on the M&A front, with the biggest seeing Charter Communications spend $55 Billion to buy Time Warner Cable and a further $10.4 billion to buy Bright House Networks. This created the second largest cable company in the US, just behind Comcast. The “Billion-dollar club” also saw French Telco Altice pay $9.1 billion for another US cable company Suddenlink Communications. Keeping with the billion-dollar deals involving telcos, Verizon paid $4.4 billion for AOL to bolster its mobile video capabilities. Another billion-dollar deal saw HP unload 70% of its stake in its China server, storage and technology storage unit to Tsinghua Holdings for $2.3 billion. The final billion-dollar deal saw EMC pay $1.2 billion for cloud service provider Virtustream. Apple was out buying a couple of companies in May 2015, snapping up mapping company Coherent Navigation and augmented reality company Metaio. In other deals, Avaya bought cloud technology company Esna; and Cisco bought cloud programming interface company Tropo.
May 2016 saw some M&A activity, with the largest deal seeing HPE merge its services arm with CSC in a $8.5 billion deal to create arguably the largest IT services company. In another large deal, Vista Equity Partners paid $1.79 billion for customer service and marketing cloud provider Marketo. There were some other big names out shopping in May too. Oracle paid $532 million for software as a service for the utilities vertical, company Opower; Google picked up interactive training platform Synergyse; Infor bought consulting services company Merit Globe AS; and ARM paid $350 million for imaging and embedded systems company Apical. Microsoft ended an unhappy period by divesting its feature phone business to FIH mobile for $350 million, and GoDaddy picked up cloud-based phone company FreedomVoice for $43 million. New Signature picked up another Microsoft solution provider, Dot Net Solutions; and Edmonton-based F12.Net bought Calgary-based professional services company XCEL.
The most significant purchase in May 2017 was the $1.86 billion sale of CenturyLink’s data centres and colocation business to a consortium led by BC Partners, Medina Capital Advisors and Longview Asset Management. Cybersecurity startup, Hexadite, was bought by Microsoft for $100 million. Goldman Sachs entered the BI space by purchasing a minority stake in Information Builders of New York City. Apple acquired Beddit, a Finnish sleep sensor product, for an undisclosed amount. Finnish cybersecurity firm, F-Secure acquired British security consultants, Digital Assurance also for an undisclosed amount.
Last year, May 2018 was a very active month for M&A activity, with Microsoft’s $7.5 billion purchase of GitHub leading the pack in size. Microsoft also bought AI company Semantic Machines. PayPal paid $2.2 billion for European payments company iZettle; Recruit paid $2.1 billion for Glassdoor; Investment firm KKR paid $2 billion for BMC Software; and Office Depot paid $1 billion for CompuCom. Other big names out shopping saw Oracle buy collaboration platform Datascience.com; Google bought cloud migration startup Velostrata; HPE bought Plexxi; Rackspace bought RelationEdge; and Splunk bought Phantom Cyber Company.
Which brings us back to the present
The big deal in May 2019 saw HPE pay $1.3 billion for supercomputer manufacturer Cray. Palo Alto Networks continued growing its cybersecurity capability with the purchase of two companies, Twistlock and PureSec. Plus, there was some M&A activity among a number of other well-known companies: Amazon bought mesh network company Eero; Symantec bought Luminate Security; Rogers bolstered its podcast capability with the purchase of Pacific Content; NCR added to its point of sale depth, buying Texas POS; Foursquare bought competitor location tech company, Placed; ServiceNow picked up the assets of mobile analytics company Appsee; and Comcast bought WiFi company Deep Blue Communications.
Cybersecurity continues to be topical, with an Accenture report highlighting the increasing cost to companies for cybercrime; a Proofpoint report also highlighted the sheer volume of attacks on Canadian businesses.
Other news saw some Canadian cities receiving Federal taxpayer money to improve their SmartCity initiative, with Montreal winning the big money, $50 million. There has been a lot of news on 5G, particularly concerns around Chinese company Huawei, but china is rolling out the first national 5G network — perhaps their answer to supporting that company?
A look around the world at employment numbers and economic indicators suggests that generally employment numbers are improving, with a few exceptions. Brexit continues to plague the UK and inhibit business. It was also interesting see that Germany unemployment numbers worsened in May, for the first time in 5 years, albeit a tiny change from 4.9% unemployment to 5%. The US added 275,000 jobs in April and their GDP grew at an annual rate of 3.1%, continuing their strong economic growth, the longest expansion in US history. Canada showed an increase of 106,500 jobs in April (61,000 if you prefer the ADP numbers) which is excellent growth. GDP growth however remains anemic at an annual rate of 0.4%.