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Conversation closed for EMC, HP

The merger talks between the two companies have been formally terminated.

Paul Booth
By Paul Booth
Johannesburg, 20 Oct 2014

The international ICT market was very quiet last week. There was a breakdown of talks between EMC and HP; and Iliad pulled out of its potential acquisition of T-Mobile US.

At home, government's possible sale of its stake in Vodacom stole much of the local ICT media space.

Key local news

* Mixed interim numbers from Datatec, with revenue up 7.9% but profit down 3.8%.
* Good year-end figures from Broadband Infraco, with revenue up 27.4% and EBIDTA up 55.5%.
* A renewed JSE cautionary by TCS.
* Multisource, a global convergence technology company, acquired WBS, the parent company of iBurst and Broadlink.

Key international news

Look out for the possible disposal by government of its stake in Vodacom.

* EE acquired Life Mobile, part of the Phones 4U business that was recently forced into administration.
* EMC bought Cloudscaling, a cloud computing start-up that helps companies manage large numbers of computers that are linked together by OpenStack.
* Qualcomm purchased CSR, the UK-based chipmaker and Bluetooth specialist, for $2.5 billion.
* Softbank acquired DramaFever, a streaming video service.
* Tata Consultancy Services bought CMC, an IT services, consulting and software company.
* Google and others made a $500 million investment in Magic Leap, a hardware and software developer, in a move designed to deliver 'cinematic reality'.
* Ingrasys Technology, a subsidiary of Foxconn Electronics (Hon Hai Precision Industry Hai), made a 40% investment in Hope Bay, a Taiwanese cloud computing-based storage and computing solution provider.
* KKR, a major private equity company, made a $55 million investment in arago, a German firm that develops artificial intelligence software to replace IT workers.
* Publicis Groupe SA (France) made a 20% investment in Israeli Matomy Media Group, a digital advertisement technology company.
* Iliad (France) has pulled out of negotiations for a majority stake in T-Mobile US.
* The merger talks between EMC and HP have been formally terminated.
* Alibaba has rebranded its affiliate, Alipay, as Ant Financial Services.
* Lenovo will create a new company to focus on building an Internet-based smart devices and services business in China.
* Danaher, a US healthcare technology group, is combining its communications unit with NetScout Systems, in a deal valued at more than $2.6 billion. The former will own a majority stake, although the latter will have operational control.
* Very good quarterly figures from Netflix.
* Good quarterly numbers from HCL Technologies, Linear Technology, NetScout Systems, TCS and TSMC.
* Satisfactory quarterly results from Infosys, Intel, Mindtree, Qlogic, Syntel and WNS.
* Mediocre quarterly results from Adtran, AMD and Cypress Semiconductor (but back in the black).
* Mixed quarterly figures from eBay, with revenue up but profit down; Google, with revenue up but profit down; and SanDisk, with revenue up but profit down.
* A good IPO on the NYSE by Zayo Group, a fibre-optic group whose annual revenue is already in excess of $1.1 billion.

Research results and predictions

EMEA/Africa:
* African countries such as Ghana, Kenya, Nigeria, Rwanda and Tanzania, in co-operation with international development agencies, academia and ICT vendors, are making considerable investments in ICT infrastructure, according to IDC. This presents attractive opportunities for IT service providers.
* The MEA handset market grew 27% in Q2 to 64 million units, with the smartphone stake rising 13% to 40%, according to IDC. SA's handset growth was 32%.
* The MEA PC market grew 10.4% in Q3 to 23.7 million units, with HP retaining its number one slot, although Lenovo has significantly closed this gap, with a growth that was more than double that of HP, according to IDC.

Worldwide:
* Makers and start-ups, not technology providers, consumer goods companies or enterprises, will drive acceptance, use and growth in the Internet of things (IOT) through the creation of a multitude of niche applications, according to Gartner. It is predicted that by 2017, 50% of IOT solutions (typically a product combined with a service) will originate in start-ups that are less than three years old.
* Worldwide tablet sales will reach 229 million units this year, an 11% increase over 2013, according to Gartner. Combined shipments of devices (PCs, tablets, ultra-mobiles and mobile phones) will reach 2.4 billion units, a 3.2% increase from last year.
* Intelligent systems (microprocessors, connectivity and high-level operating systems excluding PCs, phones, tablets and servers) will exceed $1 trillion in 2019, up from 1.4 billion units and $755 million in 2014, according to IDC.
* Global shipments of notebooks (excluding two-in-one models) showed an increase of 6.4% sequentially and 2.6% on year in Q3, with estimated shipments of over 45 million units, according to Digitimes Research. HP was the number one vendor, with 21%, followed by Lenovo (20.9%) and Dell (9.7%).

Stock market changes

* JSE All share index: Up 1.6%
* Nasdaq: Down 0.4%
* NYSE (Dow): Down 1%
* S&P 500: Down 1%
* FTSE100: Down 0.5%
* Top SA share movements: Altron (-9.1%), Ansys (+10.8%), CompuClearing (+8.2%), Ellies (-12.8%), Metrofile (+8%), Pinnacle Holdings (-7%), Sekunjalo (-7.6%) and Telkom SA (-14.2%)

Look out for

International:
* The possible IPO or sell-off of EE, the UK mobile operator jointly owned by Orange and Deutsche Telekom.

South Africa:
* The possible disposal by government of its stake in Vodacom.

Final word

Gartner recently revealed its top 10 predictions for IT organisations and users for 2015 and beyond. Gartner analysts presented their findings during the Gartner Symposium/ITxpo at the beginning of the month. Top predictions for 2015 examine a shift in the relationships between man and machine due to the emergence of digital business.

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