For the technology sector, 2003 was a tumultuous year in terms of corporate activity, packed with liquidations, mergers and acquisitions, restructuring, delistings and high-level resignations.
Several IT companies either delisted from the JSE or announced plans to do so, with the highest-profile delisting of the year being that of Softline, which was acquired by UK-based Sage Group. Other delistings include Streamworks, Tradek and OSI, with other companies - Aqua Online, Aplitec, MGX and EC-Hold either planning on or considering leaving the JSE`s boards.
However, the year also saw the listing of telecoms utility Telkom, whose share price has more than doubled since its debut in March.
Tough conditions remained evident throughout the year, not just in the financial results of several companies buffeted by rand volatility, but in the number of companies either liquidating or restructuring to avoid collapse.
The sector bid farewell to unlisted Rubico, once a high-flying darling of the local IT industry that applied for liquidation in June. MGX, which has been restructuring since the beginning of the year, recently admitted that it would also have collapsed had it not been for a lifeline provided by a consortium of bankers.
AST is also in the midst of a restructuring programme aimed at cutting costs and debt levels. Other companies that implemented restructuring or retrenchment programmes this year included Intervid, Global Technology, CS Holdings and Casey, among others.
The year also saw several company bosses step down, including AST chairman Gerrie de Klerk, Intervid CEO Rob le Sueur, MGX interim CEO Peter Flack, CCI CEO Michael Purves, Software Futures MD Derek Hughes and Connection Group CEO Toni Fourie.
There was a lot of activity on the acquisitions front, although the value of deals was in most cases far from spectacular. The big local IT deal of the year was Altech`s R560 million acquisition of NamITech, although the Competition Commission has recommended that the deal be blocked.
The matter was referred to the Competition Tribunal and Altech has said it will oppose the commission`s recommendation.
Other deals included the various disposals by MGX as part of its recovery plan, the sale by Glotec of its Temenos stake and other subsidiaries, CS Holdings` purchase of First National Bank`s IT customer services division and Reunert`s acquisition of a stake in CS Holdings.
The year also saw the disposal by Nedcor of its Dimension Data stake, Gandalf Trust`s acquisition of a controlling stake in Zaptronix, UCS`s purchase of Affinity Logic and EOH`s acquisition of Atos KPMG Consulting.
Black economic empowerment (BEE) has become one of the big deal drivers in the sector and is set to remain a prominent factor in the coming year. Various companies concluded significant BEE deals, including Paracon, Faritec, MB Technologies, Software Futures, Comparex, Prism, Mustek and Jasco. Dimension Data is one of several companies known to be seeking a BEE equity partner.
Market players expect that corporate activity will increase next year as stronger groups take advantage of acquisition opportunities and BEE becomes increasingly important to companies wanting to do business with government or with other companies that have government business.
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