Tax dispute racks up hefty price tag
The dispute is accumulating a potentially large amount of nearly $2 billion for dozens of big US companies, including Facebook and Alphabet.
The growing concern regarding the potential investigations involving the ‘big’ technology boys dominated the international ICT market last week.
At home, activities involving Datatec were in the spotlight.
Key local news of the past week
- Satisfactory year-end figures from Mastek, with revenue up 3.1% and profit up 31%.
- A full-year loss from Metro file Holdings, although revenue up 4.7%.
- A negative trading update from Cognition Holdings.
- Datatec’s Logicalis Group acquired a 70% interest in Cilnet, a Cisco systems integrator and managed services business in Portugal; and Orange Networks, a Microsoft services business focused on Microsoft cloud and managed services with Germany-wide presence, including Hamburg, Munich, Offenbach and Düsseldorf.
- Naspers Ventures led a $2.3 million investment in DappRadar, a platform for discovering and analysing blockchain-based decentralised applications, or dApps.
- Altron said three senior executives of Altron Nexus, a subsidiary of Altron, have been placed on precautionary suspension following an investigation that has revealed potential internal irregularities.
- SA-based Web hosting company HostAfrica is to merge with Greycell, trading as AmpleHosting.co.za, a hosting market specialist company.
- MIC Investment Holdings has disposed of its 40% equity interest in Westcon SA, and Ascension Capital Partners, a private equity investor, has acquired a 40% equity interest to become the new BEE partner of Westcon SA.
- Following Investec’s decision to exit from its stake in Vox, the existing shareholders, together with Vox management, have increased their individual shareholding in the company.
- A new JSE cautionary by Metro file Holdings.
- A renewed JSE cautionary by Ayo Technology Solutions.
- A withdrawn JSE cautionary by Labat Africa.
Key African news
- Capricorn Investment Group (CIG), owner of Bank Windhoek in Namibia, made a $17 million (30%) investment in pan-African telecoms company Paratus Africa Group.
- Nimbus Infrastructure has announced a proposed share swap transaction with Paratus Group Holdings to increase its stake in Paratus Telecom Namibia from 51.4% to 100%. In return for acquiring Paratus Group Holding’s 48.6% stake, over 20 million new ordinary shares in Nimbus will be allotted to Paratus (equating to a 41.1% stake) for a total value of $13.8 million.
- The appointment of Ian Ferraro as Airtel's regional director for East Africa.
Key international news
Three senior executives of Altron Nexus have been placed on precautionary suspension.
- The Alibaba Group acquired NetEases’s e-commerce business Kaola for $2 billion.
- CGI bought Annams Systems Corporation, trading as Sunflower Systems, a leading provider of asset management software solutions and services.
- Chegg, an edtech company, purchased Thinkful, an online career accelerator, for $100 million.
- Commvault acquired Hedvig, a software-defined storage innovator, for $225 million.
- Iron Mountain bought Suppla's Business Process Outsourcing unit, which is focused on information management.
- Kerridge Commercial Systems purchased MAM Software Group, a global provider of on-premises and cloud-based business management solutions for the automotive parts, tyre and vertical distribution industries. The deal was worth $154.2 million.
- Microsoft acquired Movere, a cloud migration start-up.
- Palo Alto Networks bought Zingbox, an IOT security company, for $75 million.
- Par Technology purchased the assets of 3M’s Drive Thru Communications Systems business.
- Rambus acquired the Silicon IP, Secure Protocols and Provisioning business of Verimatrix, formerly Inside Secure, a global provider of security and analytics solutions that protects devices, services and applications.
- Red River, a solution provider and MSP with strong experience in the government, commercial and education markets, bought CWPS, another MSP.
- Splunk purchased Omnition, a SaaS start-up that uses distributed tracing as a means to monitor microservices applications.
- Toshiba Memory acquired Lite-On Technology’s SSD business unit for $165 million.
- Trimble bought 3LOG Systems, a supplier of timber management software solutions.
- Silver Lake, a private equity company, made a $1 billion investment in Motorola Solutions.
- Indian buyout firm TIW Private Equity invested a majority stake in India-based Digital Refresh Networks, a digital marketing firm.
- Vodafone Group has signed a strategic partnership agreement with Oman Future Telecommunications to launch mobile network services in the sultanate of Oman.
- A bipartisan coalition, led by the New York state attorney general, is launching an investigation into Facebook to determine whether the company’s actions endangered consumer data and increased advertising costs.
- Amazon has been fined €4 million by the Paris commercial court for introducing abusive clauses in its contracts with third-party vendors.
- AppLovin, the US mobile marketing firm backed by private equity firm KKR & Co, has invested in several gaming studios as it adds to its library of games ahead of a potential initial public offering.
- AIM-listed electronics manufacturer Filtronic has revealed it has begun the process of selling its telecoms antenna operations.
- Flat panel maker Innolux has spun off its medical display unit to form a new entity, InnoCare Optoelectronics, as the firm gears up efforts to tap the emerging smart medical device market.
- Micro Focus has been dropped from the FTSE100 Index.
- Sybil Holdings Sarl has sold off about 12% of the Avast shares it held, for £443.7 million.
- A long-running tax dispute is racking up a potentially hefty price tag of nearly $2 billion and counting for dozens of big US companies, including Facebook and Alphabet.
- More than 30 US state attorneys general are readying an investigation into Alphabet's Google for potential antitrust violations.
- Excellent quarterly results from Zoom Video Communications.
- Good quarterly numbers from Ciena and SAIC.
- Good half-year figures from Craneware and Gamma Communications.
- Satisfactory quarterly results from Descartes Systems and eGain (back in the black).
- Mediocre quarterly results from Guidewire Software.
- Mixed quarterly figures from Verint Systems, with revenue up but net income down.
- Mixed half-year figures from Maintel Holdings, with revenue down but net income up.
- Quarterly losses from Cloudera, Coupa Software, CrowdStrike, DocuSign, Domo, Dynatrace, Finisar, Medallia, MongoDB, PagerDuty, Palo Alto Networks, Perceptron, Pivotal Software, Qutoutiao, SecureWorks, SITO Mobile, Slack Technologies, Smartsheet, Tufin Software Technologies and Volt Information Sciences.
- Half-year losses from Ethernity Networks, IQE, Jiangsu Changjiang Electronics Technology and Tongfu Microelectronics.
- The appointments of Jun Dong as chairman and acting CEO of Pintec; Pravin Jadhav as CEO of Paytm Money; Kevin Loosemore as chairman of De La Rue (already executive chairman of Micro Focus); John Stankey as president and COO of AT&T; and Wendy Becker as chairman of Logitech International.
- The resignations of Wei, chairman of Pintec.
- The departure of Guerrino De Luca, chairman of Logitech International (stays on the board).
- Wei has taken a temporary medical leave of absence as CEO of Pintec.
- A satisfactory IPO on the Toronto exchange by Israel-based Zoomd, the provider of a search and mobile user-acquisition platform for online publishers and advertisers looking to increase content monetisation by higher user engagement
Research results and predictions
- The MEA personal computing devices market, which is made up of desktops, notebooks, workstations and tablets, declined 9.1% year on year (YOY) in Q219, according to IDC.
- Shipments of EMEA traditional PCs (a combination of desktops, notebooks and workstations) will total 71.7 million in 2019, a 0.2% YOY growth.
According to IDC:
- Large format printer shipments declined in 2Q19, continuing the decline from the first quarter of the year.
- Vendor revenue in the worldwide server market declined 11.6% year over year to just over $20 billion during 2Q19. Worldwide server shipments declined 9.3% year over year to just under 2.7 million units.
- Global spending on artificial intelligence systems is expected to maintain its strong growth trajectory as businesses continue to invest in projects that utilise the capabilities of AI software and platforms. Spending on AI systems will reach $97.9 billion in 2023, more than two-and-a-half times the $37.5 billion that will be spent in 2019. The CAGR for the 2018-2023 forecast period is 28.4%.
- Vendor revenue in the worldwide enterprise external OEM storage systems market decreased 0.8% year over year to $6.3 billion during 2Q19. Total capacity shipments in the external storage systems market were up 5.2% year over year to 16.3 exabytes during the quarter, while capacity shipments in the total market (including ODMs and server-based storage) declined 4.2% to 107.9 exabytes.
- The combined consumer and enterprise wireless local area network market segments declined 4.4% year over year in 2Q19, with worldwide revenue of $3.5 billion.
- The worldwide Ethernet switch market (Layer 2/3) recorded revenue of $7.07 billion in 2Q19, an increase of 4,8% year over year. Meanwhile, the worldwide total enterprise and service provider router market revenue grew 3.4% year over year in 2Q19 to $3.96 billion.
- According to IHS Markit, chip sales during the initial six months of 2019 plunged by 13.9% compared to a year earlier, the biggest drop in a half-year since the first half of 2009.
Stock market changes
- JSE All share index: Up 0.8%
- FTSE100: Up 1%
- DAX: Up 2.1%
- NYSE (Dow): Up 1.5%
- S&P 500: Up 1.8%
- Nasdaq: Up 1.8%
- Nikkei225: Up 2.4%
- Hang Seng: Up 3/8%
- Shanghai: Up 3.9%
Look out for
- Further developments regarding the investigations involving the large technology firms.
- The acquisition of Symantec or parts of it by a private equity company.
- Hisense starting the manufacturing of cellphones in SA.
- Zoho Corporation, an India-based developer of a wide spectrum of software as a service business applications, opening a local office in SA.
The FT 1000, Europe’s fastest growing companies list for 2019, has just been published. Included in the top 50 from a technology perspective are:
- 3: Taxify (Estonia), now known as Bolt, a provider of a transportation platform
- 4: Solectric (Germany), a specialist in camera systems, LED light and drones
- 6: Housekeep (UK), a technology company
- 9: Darktrace (UK), a cyber security firm
- 18: Tantal (Germany), an e-commerce company
- 23: TenderHut (Poland), a technology services firm
- 24: AND Digital (UK), a digital transformation firm
- 25: Perkbox (UK), a bunch of company culture enthusiasts with a suite of products dedicated to enhancing employee experiences
- 27: Anteco Systems (Spain), an IT services company
- 28: Tooploox (Poland), a software development company
- 38: Schuh Benner (Germany), an e-commerce company
- 42: Laser Wire Solutions (UK), a technology firm
- 43: Unify Communications (UK), a telecommunications company
- 45: Vmway (Italy), a technology company