Today, CEOs from the twelve companies selected to participate in our fourth Little British Battler Day (see Little British Battlers – the Fourth Generation for the list) are coming to London to meet the TechMarketView team and discuss their achievements, challenges and aspirations for their businesses.
We will be publishing highlights of each company in UKHotViews in coming weeks and will we publish a more detailed analysis of the companies in our next Little British Battler report.
Because today’s event sees the entire TechMarketView research team out the office from the crack of dawn, there will be a limited UKHotViews service this morning. But fear not - we will be back tomorrow as usual talking about the things that really matter in the UK IT scene.
Posted by HotViews Editor at '07:40'
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New Jersey-based (though India-centric) offshore services firm Cognizant has dipped its toes into the digital video pond with the acquisition of Atlanta-based itaas. Terms were not disclosed but itaas only employs around 200 staff in North America and India, so we can’t be talking big bucks.
Cognizant is one of the most acquisitive of the offshore brigade, concentrating mainly on small fill-in deals. Itaas does development, integration, testing and support for the TV and wider video industry, with solutions that of course encompass mobile platforms too. Looks like another canny buy.
Posted by Anthony Miller at '07:30'
Sanderson has issued a positive trading update this morning. Results for the six months to 31st Mar 14 show underlying revenue growth of 20% to £7.9m. This was manly due to the acquisitions of Catan Marketing in Aug 13 (See Sanderson builds out in ecommerce) and One iota in Oct 13 (See Sanderson cares more than one ioto about multi channel). Without those acquisitions underlying revenue growth was 4%. Profits (‘before all the other stuff’) was up 20% at £1.2m. Our love of cash as a measure was rewarded with an increase in cash balances from £4.5m to £5.0m yoy
Going forward, Sanderson ‘has detected some improvement in business sentiment from its customers’. It reported a large order book (£2.46m compared with £1.58m last year) for delivery in H2.
Sanderson has been part of the ‘Holway Portfolio’ since their IPO in 2004.
Posted by Richard Holway at '07:28'
The Race for Change: An Evening with TechMarketView
Date: Wednesday 17th September 2014
Time: 18.00p.m. – 23:00p.m.
Venue: BAFTA, 195 Piccadilly, London W1J 9LN
Join TechMarketView’s analyst team at the annual TechMarketView Presentation & Dinner on Wednesday 17th September 2014 to hear how the ‘Race for Change’ is impacting all areas of the UK software, IT services and business process services market. Last year’s inaugural event was a huge success and this year’s promises to be an equally high profile date in the UK tech calendar.
Whether you’re a supplier of software, IT or business process services, an investor in the sector or an end-user of SITS services, the insight and analysis provided by TechMarketView will prove invaluable as you plan for a future in a world that is changing rapidly. Learn more about trends such as the rise of the data driven business, the advent of business process automation or the era of wearable computing, and hear firsthand which suppliers we think will be the winners and the losers in 2014 and beyond.
The evening will kick off with presentations from TechMarketView’s analyst team, led by TechMarketView founders Richard Holway MBE and Anthony Miller. Throughout the evening you’ll hear the candid views of TechMarketView’s experts on software and application services, infrastructure services and business process services, and get an update from our well-respected UK public sector and financial services SITS market analysts. You’ll gain insight into what’s really happening in the UK SITS scene and the implications for your organisation in the years ahead.
After an opportunity to quiz the speakers and mingle with your peers at a drinks reception, sit down to a sumptuous dinner in the magnificent surroundings of BAFTA in Piccadilly to continue the debate and network with senior colleagues from across the UK SITS sector. The audience is set to include CXOs and senior managers from a broad spectrum of suppliers and end users in the sector, including public sector organisations.
Tickets cost £395+VAT for TechMarketView subscription clients and £495+VAT for everyone else.
Last year’s event was a sell out, so don’t miss your chance to be there in September 2014.
Reserve your place now by clicking here or by contacting Tina Compton at techUK who is organising the event for us (email tina.compton@techUK.org).
Posted by HotViews Editor at '07:00'
Management at Hampshire-headquartered buy-and-build insurance business process services player Quindell came out with all guns blazing this afternoon to refute claims about alleged financial reporting irregularities published by research firm Gotham City Research. Quindell’s shares plummeted by 39% on the news. Quindell founding CEO Rob Terry said the company was seeking legal advice and will issue a more detailed response later this week.
Gotham City, according to its website, ‘focuses on due diligence-based, special situation investing. As of the publication date of our articles, we may have long or short equity positions in the companies covered’. One can only speculate on which way it might have placed its bets in this case. The company has since tweeted its response to Quindell’s rebuttal thus: “We find Quindell's response (unsurprisingly) lacking in details. We also find their response defamatory to the Gotham City Research brand.”
In my recent post on Quindell’s FY results (see Quindell proving its point) I repeated my mantra that ‘the truth is in the numbers’. Of course, this assumes that the numbers are true in the first place. And on this point I am in absolutely no position nor qualified to comment. Gotham City evidently believes it is.
Posted by Anthony Miller at '22:22'
We are seeing more enterprises with the desire to make better use of their data. The obvious uses are improving decision making as a route to competitive gain, reduced risk and plain old (but still valuable) cost-saving internal efficiency. But there is also a growing appetite to ‘productise’ data so that it can become a revenue driver in its own right. These requirements are the background for the emerging class of data driven applications (DDAs) that extract the value from complex Big Data sets and make it intelligible and actionable across enterprises.
Both types of use cases dangle the prospect of new revenue so are attracting the attention of established ESAS suppliers. But they are also drawing new types of vendors close, from data-owning telco’s and financial services companies and non-IT organisations with data assets they want to exploit, to marketing and digital agencies well versed in exploiting data. Established ESAS providers cannot assume they will be the recipient of DDA investments.
The latest research from ESASViews, Does the market need Big Data driven applications?, looks at this emerging area, how the market is structured in terms of suppliers, and provides insight into how two of the established application services providers – Atos and CGI - are approaching the opportunity. Our view is that DDAs are low revenue currently but strategically important because of their impact on Big Data adoption, the types of services ESAS providers need to think about providing, and how they need to build resources and go-to-market models. TechMarketView ESASViews subscribers can click here to download the report. If you have not subscribed to this forward-looking research stream as yet, Deborah Seth will be happy to help.
Posted by Angela Eager at '18:33'
After announcing the retirement of Services president Lynn Blodgett last month (see here), Xerox has now missed its services revenue target for Q114 and seen a further drop in operating margin.
Services revenue was flat at $2.9bn (against an expectation of 1% growth) and operating margins fell almost 1 ppt to 8.6%, despite efforts from its ‘5-plank’ services strategy’ to cut costs (see Xerox services goes into reverse (update)). Like the previous quarter, BPO was the problem, with revenue down 2% to $1.77bn due to the continued run off from the discontinued US student loan contract. Document outsourcing and ITO helped however with revenue up 4% and 1% respectively.
Services signings are a good indicator of future performance, but unfortunately, here things look really bleak. Total contract value (TCV) of new signings was down 20% on the same period last year at $3bn. BPO, the biggest part of the services business, was down 25% to $2.1bn, meanwhile DO was down 18% to $650m. The single bit of good news was from ITO, where signings almost doubled to $200m, due to Xerox benefitting from the Affordable Care Act (Obamacare) where it won a number of new IT services contracts in the quarter.
ITO is such a small percentage of the services mix though (13%) that even better progress here won’t stem the declines in BPO and DO. Indeed Xerox is predicting services to be down 3% in FY14, and a mid-single digit decline in the heritage technology business. Restructuring looks set to continue in 2014. What’s really needed is root and branch change.
Posted by John O'Brien at '17:08'
Many congratulations to Postcode Anywhere founding CEO Guy Mucklow who will be off to Buckingham Palace to receive the Queen’s Award for Enterprise Promotion for his voluntary work in promoting enterprise in Worcestershire and beyond.
Mucklow also leads the SME Forum (and is my fellow board member) at industry association techUK and is also involved (along with our very own Richard Holway) with the Code Club, an excellent ‘not-for-profit’ network of volunteer-led after school coding clubs aimed at giving 7 – 11 year olds the chance to learn how to code.
A richly deserved award indeed.
Posted by Anthony Miller at '16:31'
Colt has updated the market on its performance for the three months ending March 2014. At constant currency, revenue increased 1.2% to €399.8m, compared with a decline of 0.7% in Q1 of last year. Across its four business lines, the performance was mixed. Data Centre Services grew 8.1%, reversing last year’s decline of 3.4%. Voice Services revenue was all but flat (0.8%), but nevertheless better than 2013’s 4.6% decline. Meanwhile IT Services revenue grew 15% (up from 4.3% last year) – although this was largely due to increased levels of equipment sales. Network Services registered a flat performance (0.4%), down from last year’s growth of almost 2%.
Notably, the EBITDA margin reduced from 20.5% to 18.5%. A number of factors contributed to this, including changes in the product mix. For the full year, Colt expects EBITDA (before restructuring charges) to be c5%-10% below current consensus estimates of €325m.
Colt faces the significant challenge of countering slower growing and/or lower margin business with revenue that is stronger growing and/or more profitable (Colt FY13 flat in a “challenging year”). Solving this is neither straightforward nor painless. The company is currently undertaking a strategic business review and has today announced it will reduce its carrier voice business to free up capacity for more profitable enterprise business. It says this will improve Group profit margins over the next few years but will result in the loss of c€175m in annualised revenue. The second half of the year will also see some “workforce restructuring” – with benefits to profitability expected to flow through in 2015. Colt is certainly feeling the pain of challenging market conditions and a complex transformation process. The question is whether 2015 will see more gain than pain.
Subscribers to InfrastructureViews and our Foundation Service can read this recent research note on Colt: The IT services piece in the Colt growth puzzle.
Posted by Kate Hanaghan at '09:28'
London-headquartered mapping app developer Citimapper has scored $10m in a Series A funding round led by Balderton Capital, along with other VCs and ‘angels’. The app is currently live in London, New York, Berlin and Paris. I must admit to using the app and it looks pretty good to me. Just need them to add Sao Paulo to the list.
Posted by Anthony Miller at '09:22'
Mumbai-based offshore service leader TCS is to boost its presence in Japan through the creation of a joint venture which merges together its existing Japan businesses with IT Frontier Corporation, the IT ‘captive’ of Japanese industrial giant Mitsubishi Corporation. TCS will own 51% of the JV. TCS had previously created a JV with Mitsubishi Corp (Nippon TCS Solution Center Limited) which served as TCS’ ‘nearshore’ delivery centre in Japan. The new entity is expected to generate revenues of $600m p.a., a drop in the carp pond compared to TCS’ $13.4bn global revenues (see here).
Frankly I say ‘ganbare’ (go for it!) – though as I am sure TCS will have already found out, an Indian company doing business in Japan brings new meaning to the term ‘culture clash’.
Posted by Anthony Miller at '08:05'
I was interested to read in the FT (See - Nike’s FuelBand runs into trouble) and many other media that Nike is set to abandon its Fuelband ‘wearable technology’. The reports suggest that Nike will in future concentrate on Apps rather than hardware.
HotViews readers will know of my enthusiasm for ‘wearable technology’ but also my view that none of the current products fits the bill. All seem to be ‘one device – one application’. Whereas what is needed is ‘one device – many applications’. I envisage a wearable device (most likely a wristband) with multiple sensors covering heart monitoring, sweating, blood analysis, movement, positioning (eg whether the wearer has fallen down) and as many other sensors as is viable to fit into something the size of a watch. The market will then be opened up to App developers (now, clearly including Nike) who will give us a wondrous array of applications.
I see alerts of impending heart attacks (as in my much used example of the doctor calling you to warn you that you are about to have a heart attack and "the ambulance is on the way") all the way through to whether your old Mum has taken her daily dose of pills or has fallen down the stairs.
This is the great white hope for any Apple iWatch product launch rumoured for later this year. Could just be the breakthrough wearable technology product we have long predicted
Posted by Richard Holway at '06:58'
Bangalore-based offshore services major Wipro closed its final quarter for the year (to 31st March ’14) with its best operating margin in almost four years, at 24.5%. This came on the back of 8.5% yoy revenue growth to $1.72bn, 2.5% higher than the prior quarter. The Q4 result set Wipro’s FY revenues at $6.62bn, 6.4% higher than FY13, and a faster rate than the 5.0% growth in the prior year. FY operating margin was 22.6%, almost 2 points higher than FY13.
While these results are unlikely to set knees trembling at Wipro’s India-based peers, there’s nothing either that would give them succour. The real challenge is whether Wipro can reclaim share in FY15 in an offshore services market that industry association Nasscom forecasts will grow by 13-15%. That looks like a tough ask.
Posted by Anthony Miller at '19:19'
Eligible TechMarketView subscription service clients can download IndustryViews Corporate Activity Q1 2014 to read our regular summary of the UK software and IT services corporate activity scene.
Posted by HotViews Editor at '18:01'
It was another stonking quarter for Noida-based offshore services major, HCL, with revenues (to 31st March) up 14% yoy to $1.36bn, a 3% uplift qoq. HCL also recorded its best operating margin for over a decade, at 24.6%, yet again beating that of Infosys (see Infosys – too early to call a trend), the once seemingly unchallengeable margin leader.
As usual, we'll have much more to say about the India-centric IT services players – including their UK performance – in the next edition of OffshoreViews.
Posted by Anthony Miller at '11:30'
London based cross-border payments as a service company, The Currency Cloud has just raised US$10 million from a consortium of venture capital companies, further emphasising the rate of change and potential growth offered in this area of the payments market.
The Currency Cloud provides a platform-based payments engine to help customers benefit from automated processing and reduce complexity in sending payments around the world. Customers include payments firm TransferWise, Fidor Bank as well as e-commerce customers and remittance transfer companies such as azimo.
Cross-border payments is an exciting area, attracting lots of capital and offering growth, as international payment flows are boosted by cross-border e-commerce, an increasingly mobile workforce and growing global trade.
We have already written about this dynamic market in our HotView “There’s money in remittances”, and Earthport, the cross-border payments provider with its focus on banks, features in our recent report “Finding the winners in UK Payments”. Facebook is also reportedly targeting the remittance market, see here. The Currency Cloud is yet another interesting player – we will watch with interest.
Posted by Peter Roe at '10:32'
It’s only Q1 14 but SAP looks like it is in for a bumpy year. It is already facing up to the turbulent transition to more of a subscription business model (it had previously pushed out its operating margin targets from 2015 to 2017 because of its cloud shift – see SAP prioritising cloud growth over margins) and today it warned that a strong Euro had impacted Q1 and would hit Q2 as well. Shares fell nearly 4% on the news.
On an IFRS basis, total revenue was up 3% to €3.7bn. Operating profit was up 12% to €9723m and the operating margin expanded from 17.9% to 19.5%. Both were lower on a non IFRS and cc basis but still positive - up 7% and 0.1pp respectively. IFRS net profit was €534m. As an indication of the currency headwinds, on a non-IFRS and actual currency basis, operating profit was up 2% to €919m. SAP says the currency effect will be worse in Q2. The increase in operating profit indicates SAP is keeping tight control on costs, despite acquisitions and the inevitable rise in operating costs that are part and parcel of the SaaS model. Operating cash flow was €2.35bn, a 9% increase, again showing strong control.
Cloud revenue is growing – it was up 60% but that only took it to €219m (€167m and 38% growth non IFRS and at constant currency) although annual billings were up 36% reaching an annual run rate of c€1.1bn. Licence sales are waning as a consequence - software revenue was down 5% to €623m (-5% to €657m on a non IFRS and cc basis). There were no revenue figures for HANA, just customer numbers (3,200 for HANA, approaching 1000 for Business Suite on HANA, although with no detail in terms of revenue/growth and the extent customers are using HANA these numbers are not very meaningful). There was no mention of mobile progress, which along with cloud and HANA is a one of SAP’s growth engines.
Overall it was a workman-like set of results, with notable pain points, that points to the extent of change to come. If SAP can keep control of costs it will maintain the confidence of the market
Posted by Angela Eager at '10:00'
It’s certainly nice to know they’re all friends in France. Atos management confirmed this morning that they had made a ‘friendly offer’ to buy Steria at €22 per share cash, just ahead of the announcement of Sopra’s ‘friendly offer’ to buy Steria (see Steria & Sopra - a very French rendezvous) in an all-share deal which the companies presented as having the same face value though, according to Atos, the market had assessed at somewhere between €18-18.50 per share. Atos’ offer will remain on the table until the Sopra EGM that would ratify the Steria acquisition. Atos management said “we will not make any other move towards Steria … as Atos will always keep a friendly approach”. Only the French!
Meanwhile, Atos reported its Q1 performance (to 31st March) which saw group revenues slip by nearly 2% like-for-like to €2.06bn. Atos UK was once again the growth leader at +1.6% to €396m; every other geo unit went backwards.
I’ve just had a long chat with Atos UK CEO Urusla Morgenstern and will write more about the changing shape of Atos UK in UKHotViews Extra later.
Posted by Anthony Miller at '09:55'
IBM’s Q1 figures failed to alleviate concerns over the company’s transformation to a higher growth/margin business focused on cloud, Big Data, analytics, social, mobile and security. (See our 4Q comment here)
Reported revenue was US$22.5 billion, down 4%, but down only 1% when adjusted for currency and the customer care outsourcing divestment. Net income fell 21% to US$2.4 billion (GAAP), hit by a US$870m “workforce rebalancing” charge, but boosted by $100m profit on the customer care divestment. Gross margin rose by 90bp to 47.6% (non-GAAP).
IBM’s portfolio-rebalancing is furthered by the sale of its standard server business to Lenovo, see here, but hardware sale remain under pressure with a 40% decline in mainframes and 20% declines in Power Systems and Storage. IBM expects investment in more powerful servers (POWER8) and in the OpenPower development alliance to slow this decline in later quarters.
The Software business was up 2%, despite the hit in operating systems as hardware sales declined. The key middleware offering, Websphere, was up again, by 12% and mobile software business doubled.
Global Technology Services grew 2% (adjusted) and IBM is relying on the US$1.2 billion investment in expanding the Softlayer cloud footprint, the introduction of BlueMix platform as a service, and the acquisitions of Aspera, see here, and Cloudant, see here, to boost credentials and revenue in its sub-scale cloud and big data businesses. Global Business Services was flat year-on-year but the Digital Front Office business pushed Consulting revenue up by 5%.
Progress is further hindered by large revenue declines in its “growth” markets, particularly China and Asia ex-Japan, with little sign of a near-term improvement.
IBM pushed hard in Q1 in its Race for Change, but it will take considerable time, and patience, for it to achieve its transformation goals.
Posted by Peter Roe at '09:46'
blur Group has released another (see Blur blurs the numbers) year-end update for FY13, indicating that revenue will be in the $5.3m to $5.6m range (FY12: $2.8m).
The company runs a platform where buyers can submit briefs for a variety of business services (e.g. legal, marketing, design, advertising, IT) for which suppliers can then bid. blur’s technology also helps buyers to select the best ‘pitch’ and then manage the invoicing and payment process. However, the company says that projects submitted to the exchange are getting larger and increasingly complex, which is extending the buying timeline. This means that revenue previously expected to drop in FY13 will now be recognised in FY14 (“and beyond”).
While FY13 revenue looks like it will almost double, bookings in the period leapt 825% to $22.2m. The first quarter of FY14 has seen “high growth” in both the volume of projects submitted to the exchange and average project values. The total value of projects submitted in the first three months of the new financial year was $73.7m, up from $3.89m in FY13 and $1.86m in FY12.
The growth curve in volume and value of projects submitted to blur’s exchange is notable. However, we’ll have to wait for the full release of FY13 results in May to learn more about the progress of the profit line. The company has previously said that it expects to be able to turn the business into profit in 2015 and reach margins in the high-20s by 2020.
Posted by Kate Hanaghan at '09:14'
There’s no change at WANdisco so far in Q1 – but that’s a good thing because it means bookings are still heading upwards at a strong rate. They were up 40% yoy to $4.2m in Q1. The mix of business is showing very early signs of a change however because the company is starting to take direct revenue from big data sales following contracts with British Gas and University of California Health. Big data technology revenue was only £0.2m but it was zero in the year ago quarter. That means the traditional ALM side of the business had $4m in bookings, a 33% increase.
It was good to hear that OEM partner NSN is investing more in integrating WANdisco into its Hadoop architecture and that the relationships with Cloudera and Hortonworks are showing signs of delivering revenue. WANdisco is working with both Hadoop platform providers on evaluations that it expects will turn into live deployments later this year. These are in addition to the Proof of Concepts noted in Q4 (see here). All in all, WANdisco’s momentum indicates that organisations are starting to release budget for big data projects, a trend we expect to see developing over the year. The sums may be small but they are early shoots of growth. We will be taking a more in-depth look at WANdisco in the next month or so.
Posted by Angela Eager at '08:59'
Escrow and assurance software provider NCC Group is showing continuing progress after delivering one of the strongest half year performances for a number of years in January (see Nothing quiet about H1 for NCC).
Revenue for the for the ten months to 31 March was up a substantial 12% to £90.4m, with organic growth at 10%, an improvement on 7% last time. The UK, NCC’s largest escrow division, is performing in line with expectations with growth at 6% (up from 3% last year). Meanwhile, the Assurance software testing business delivered a 15% increase in revenue, of which 12% was organic.
The newly launched Domain Services division (formerly Artemis) is where a lot of management attention will be placed this year as NCC attempts to move from early investment to revenue generation. The intention is to create a secure gated community, for companies, their end users and customers to interact securely over the internet. NCC is in discussions with initial prospects to sign up to the service, which should be available from the start of September.
The Domain Services division is proving a costly exercise, with NCC having spent £4m year to date, and £6.3m in total so far. In February it acquired the .trust domain name from Deutsche Post for an undisclosed amount. Meanwhile, plans to acquire the .secure domain in early 2015 will mean further significant investments to come. Let’s hope NCC can bring paying customers along to the party.
Posted by John O'Brien at '08:58'
Microsoft CEO Satya Nadella had another outing to reveal more of his “mobile first, cloud first” strategy this week, this time focussing on the data driven business and Microsoft’s own need to establish a “data culture”.
This formed the backdrop to the announcement of tools to enable organisations to utilise their own data and Microsoft’s desire to position itself as a key player in gathering, storing, processing and presenting that data. The route is via the combination of its database products (including SQL Server 2014 – the launch provided a platform for Nadella’s comments) and data centre capabilities plus the newly announced Analytics Platform System (a big data-play because it can handle data stored in relational databases and Hadoop systems), and a limited beta of Microsoft Azure Intelligent Systems Service (which is destined to analyse data from the Internet of Things). The Office suite is positioned to act as the interface for this pool of data. This is a valiant attempt to create a framework for handling data and to link the various Microsoft technologies together. The ‘data interface’ is a key component and while Office has the benefit of being a familiar solution it will not answer all the issues – work is needed on visualisations and enabling easy ad hoc data queries. There is also a need to link data to business processes which is not an area Microsoft is strong in.
Since taking the top job Nadella has demonstrated a multi-platform commitment by taking Office to the iPad and other devices (see here), and created a stronger connection between Azure and the rest of the Microsoft portfolio (see here). The latest announcements centre on tools to handle the data flowing through mobile devices and the cloud, without which they would have no value. These three elements are coalescing into a strategy that is all about linking Microsoft’s many interests to create a coherent whole, something it has struggled with in the past. If Nadella can pull that off he will make a meaningful impact on the business and its work to prove that it can remain relevant in the new world order.
Posted by Angela Eager at '08:54'
After what seemed like a relentless slide in tech stocks, yesterday it felt that it might be safe ‘to get back in the water’. That was until Google (and IBM) reported after hours.
On the surface Google’s 19% rise in Q1 revenues yoy to $15.4b looked pretty good. Even better when you look at the ‘big numbers’ involved. Easy to grow a small company – much more difficult when the starting point is multiple tens of billions.
The problem was that the market was expecting even more. In particular, Google is having to work much harder for its bucks. Even though the number of paid clicks increased by 26%, as users turned to their mobiles, the ‘cost per click’ has dived – down 9% yoy. In a problem that seems to inflict so many of the high growth companies, profits growth – at a meagre 2.9% - lagged revenue growth.
Revenues in the UK grew 14% (same as US) to $1.58b; representing 10% of Google’s revenues. However, international revenues grew by 25% to $7.2b; 47% of Google’s revenues.
After a 3.75% rally in Google shares during the day, they ‘plunged’ c6% in after hours trading. If that is the price tomorrow, Google shares will have lost some 12.5% (or over $40b) since the beginning of March.
Little doubt that the market is extremely ‘edgy’ towards the high-flying internet stocks. Google is, of course, the granddaddy of all internet stocks and therefore many will interpret this as proof that the bull run is over. But is Google the ‘froth or the cappuccino?’ Internet search and its associated advertising is now a huge – and increasingly mature – market. It will not go away. Google is highly profitable and cash-generative. It is as secure as they come. But its really high growth days are probably over. All a bit reminiscent of what we wrote about Microsoft ten years back.
Posted by Richard Holway at '06:46'
Bangalore-based mid-tier offshore services firm Mindtree broke through the half-billion dollar barrier, closing the FY (to 31st March ’14) with revenues of $502m, 15% higher yoy. However, operating margins slipped back 50bps to 17.5%.
I recently met up with Miindtree Europe VP, Mark Wilsdon, who took over the role at the end of last after leaving India-centric major, Cognizant (see New man minds Mindtree UK/EU). I have absolutely no doubt that Wilsdon will add a much sharper sales focus to Mindtree’s European endeavours , so I suspect competitors will be seeing more and more of them in the UK in future.
As usual, we'll have more to say about the India-centric IT services players – including their UK performance – in the next edition of OffshoreViews.
Posted by Anthony Miller at '15:50'
The close of the FY for India’s most successful offshore IT and business process services firm, TCS, marked the breakthrough of the 300,000 employee barrier, 9% higher over the year. But perhaps more significantly, headline revenues for the year to 31st March ’14 grew by 16% (17% at constant currency) to $13.44bn, translating to an average 4% improvement in headline revenue productivity. This contrasts with a 3% productivity decline the prior year. Operating margins for the year reached 29.1%, over two points higher than in FY13 and the best ever for TCS.
Almost any way you look at the numbers TCS appears to have shrugged off the malaise affecting some of its Indian peers. Management never gives ‘guidance’ on future performance, but it would be a brave person to bet against TCS beating the 13-15% FY15 offshore services growth forecast by Indian software and services industry association Nasscom, especially given that TCS comfortably exceeded Nasscom’s 13% industry growth forecast for FY14.
Posted by Anthony Miller at '15:28'
Swedish ERP provider IFS had a good start to the new financial year with Q1 revenue up 14% yoy to SKr 694m (including licence revenue up 24% to SKr 107m vs. 19% growth in the year ago period). There was an important change in earnings where the pre-tax figure reversed from SKr 94m in the red to SKr 21m in the black and the EBIT margin vastly improved from -15% to +4%. Last year was impacted by costs of SKr 92m to fund a major efficiency program.
As president and CEO Alastair Sorbie highlighted, Q1 was the continuation of a strong business story (see here) and the company attracted new customers and made additional sales to existing customers. It also won business against SAP in particular, but also Oracle and Microsoft, again showing off the market appetite for alternatives to the leading providers – and IFS is certainly delivering higher growth than the single digit figures delivered by the larger competitors and outperforming the overall ERP market. The pipeline is looking reasonably strong, providing cautious optimism for the rest of the year. Sorbie said the UK (a large part of its western European business) grew well in Q1, aided by the off shore oil industry but not exclusively driven by this sector.
Interestingly, in the light of SAP’s recent decision to offer everything on the cloud and with subscription pricing (see here) Sorbie sees little demand from IFS customers/prospects. What limited demand there is for cloud provision comes from North America (where Logicalis is the hosting provider and there is also interaction with Microsoft Azure), not the UK or the rest of Europe and he says he was not asked for single quote for a subscription last year. Evidently SaaS ERP is still struggling to find supporters.
Posted by Angela Eager at '09:28'
Sky and TalkTalk are to create a joint venture (JV) with fibre network provider, CityFibre, to build a city-wide fibre-to-the-premise (FTTP) network in York. The companies say the network will be able to deliver broadband speeds of 1 Gigabit straight to homes and businesses in York. The new network will compete directly with BT and Virgin Media (Virgin Media already sells superfast broadband in part of York via its cable network).
The JV has enlisted Fujitsu to plan and build the new network, which will use CityFibre’s existing metro fibre infrastructure. It is expected that Sky and TalkTalk will start selling their competing broadband services to customers in 2015.
The Fujitsu element of the contract will be delivered by its newly-created Network & Telecoms business, which was previously the separately-run network and FTEL (Fujitsu Telecommunications) operations (see Fujitsu restructures operational units). The business will be led by Catherine Rowe, who was previously COO of FTEL. Financial terms of the JV have not been disclosed, so the value of the contract to Fujitsu is not known.
Posted by Kate Hanaghan at '09:25'
Today’s FT rightly gives front-page coverage to the European Parliament’s voting through of the regulatory package for the European financial services industry. This will shift the burden of any bank failure on to shareholders and bondholders rather than taxpayers and brings with it a wide-ranging overhaul of the regulations covering European capital markets.
We have consistently highlighted the importance of regulation to the financial services industry and to the software and IT services vendors supplying it. Subscribers to FinancialServicesViews can see our Market Trends and Forecasts document and Supplier Landscape report for background. Dealing with regulation is consuming a huge proportion of IT budget and represents a major component of the 80% of budgets devoted to keeping the lights on (Source: TechUK), reducing resources available for innovation and real change to meet customer expectations.
The decisions made in Europe represent only a milestone in the process as financial services companies will spend several years implementing the necessary changes to their systems and as various committees sort out the detailed standards. The sector now has three Europe-wide watchdogs as well as national regulators overseeing their work, almost certainly adding to delay and additional overhead.
The European regulations also raise the possibility of a weakened position for London as a financial centre. Messrs Dodd and Frank have got their act together much more quickly than the burghers of Europe and the greater certainty around US regulation is favouring investment there. We have already seen a substantial shift in derivatives trading into New York, and away from London. The regulators in Europe began the process with good intentions, but the implications for sector companies in terms of long-term competitiveness and innovation, and the vendor community supporting them, should not be underestimated.
Posted by Peter Roe at '09:21'
TechMarketView is well known for its championship of innovative UK tech SMEs through its acclaimed Little British Battler programme. But we’re also keen to support similar initiatives from respected independent institutions.
Therefore we are delighted to bring to your attention the WCIT Enterprise Awards which are presented each year to the UK’s leading technology entrepreneurs. The awards ceremony will be held at a gala dinner in central London on Thursday 12th June 2014, and this year for the first time the awards are supported by industry association techUK. The award categories are:
There will also be a special Judges’ Award given to an entrepreneur who in the opinion of the judges is a role model for others. The awards dinner will be attended by industries luminaries including Stephen Kelly, COO, UK Government, Mike Tobin, CEO of Telecity, Julian David, CEO of techUK, and TechMarketView chairman Richard Holway.
Entries close on Wednesday 7th May and you can get further details here.
Posted by HotViews Editor at '09:18'
One of the companies that will benefit from the regulatory bun-fight across Europe will be Lombard Risk Management, a provider of integrated collateral management, regulatory compliance and reporting solutions. Today they issued the briefest of trading updates, confirming that trading for the year to end March was in line with current market forecasts with strong contributions from its UK regulatory and risk business, repeating the strong performance of the previous financial year.
The company has suffered from delays to contracts as regulators extended deadlines and as customers wrestled with economic uncertainty as well as all the regulatory upheaval. See here for our first half comment. However, it seems that the confidence of the CEO John Wisbey has been borne out and revenue growth has been achieved through the year.
Lombard offers a range of structured solutions to enable companies to deal effectively and efficiently with regulatory reporting and risk management. This approach will be particularly attractive given all the changes to the rulebook. A notable coup was the March linkup with Broadridge Financial Solutions for a web-based collateral management solution, see here. It looks like the new financial year could be a busy one for the team at Lombard Risk Management.
Posted by Peter Roe at '09:06'
In this latest bumper issue of BrazilViews, TechMarketView managing partner Anthony Miller looks at the prospects for suppliers in the Brazilian IT market and explains why he thinks industry growth forecasts are still far too optimistic.
This issue also includes Miller’s impressions of some of the global suppliers operating in the Brazilian market after meeting the heads of IBM Brazil, Wipro Latin America and Infosys Brazil. He also met the top team at a couple of tiny Brazilian firms and found that innovation is alive and well in the ‘land of the samba sun’.
In the UK Miller caught up with the EMEA head of Stefanini, the largest independent IT services supplier in Brazil – and was surprised to find that the company is running service desk operations for several top name international enterprises where you might have expected to find that service in the hands of the global IT majors.
If you have any interest in the Brazilian IT market, then you should download BrazilViews here and now! But of course you do need to be an eligible TechMarketView subscription service client. And if you’re not, let Deb Seth on our client services team point you towards the samba sun.
Posted by HotViews Editor at '08:13'
There’s no denying the growth trajectory of Quindell, even if we still have reservations about how it gets there.
A Q1 trading update, shows first quarter gross sales (including pass through revenue) at £162.9m, compared to £167.3m for the whole of H1 last year. Quindell is now talking about delivering significant organic growth, but there is also clearly a lot of inorganic growth in there too. Adjusted EBITDA profits meanwhile are looking strong at £65.9m vs. £54m in H1, giving Quindell an adjusted EBITDA margin of 40.5% vs. 32% last time.
Cash however had dropped to £150m from £200m at the end of March (see Quindell proving its point), after Quindell paid out a 'significant amount of cash on acquisitions and investments completed in the period'. The most notable of these was Himex in February (see Telematics investments getting dearer for Quindell).
Since the quarter end, a further £15m in cash will have been spent on the new RAC joint venture (see here). Quindell’s is a cash hungry business, so managing this is critical. A tighter grip on future investments may be needed.
Posted by John O'Brien at '08:06'
In Jan. 14 I wrote Yahoo joins ranks of the disappointing. I could repeat the same headline for last night’s Q1 results. The core Yahoo business was flat at $1.1b as were EPS. Marissa Meyer has been in role for two years and seemed for some reason to be ‘really pleased’ with this performance. Meyer pointed to growth in display advertising and increased use of Yahoo on mobiles. But it is running hard in these areas just to keep pace with declines elsewhere. I’ve always rated Yahoo Finance and still can’t completely understand why Yahoo doesn’t concentrate on its niche product areas – where it has real USP – rather than being an ‘also ran’ in the mass market.
But few were really looking at Yahoo’s core business last night as Yahoo revealed that Alibaba – the Chinese e-commerce concern where Yahoo owns a 24% stake - had grown by a massive 66%. This sent Yahoo shares up 10% after hours.
As Alibaba is a private company which plans an IPO shortly, one of the only ways for mere mortals to own shares is via Yahoo. This has led to Yahoo shares soaring (they had risen by c200% at their high since Meyer took over although they have eased lately in the great tech sell-off) even though Yahoo’s core business has gone nowhere.
But the Alibaba IPO is no longer a guaranteed money-spinner. They are in exactly the frothy area of ‘tech’ where share prices have plunged of late. See my Differentiating ‘the froth from the cappaccino’ article on Monday.
Posted by Richard Holway at '06:33'
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