Weekly Digest
Weekly Digest Issue No. 544
02-12-2010
by Deirdre McArdle
Accenture, Genband to create jobs | Google facing EU investigation, eyes Groupon
Irish software firms in demand
It's been an active couple of weeks for the Irish tech industry, following the acquisition last week of Cork-based Firecomms by China's ZJF Group, and this week's news that two other firms have generated interest. At an EGM on Monday, shareholders of financial and compliance software firm Trintech approved the sale of the Irish firm to US equity group Spectrum. The deal, expected to be finalised by the end of the year, is reported to be worth EUR93 million (USD129.4 million); under the deal, shareholders will receive USD6.60 per American depository share (ADS), which works out at around EUR3.30 a share. The Irish Times reports that Trintech founder Cyril McGuire told shareholders the offer was an excellent price for the company, which employs 170 people at its base in Dublin. McGuire also said that Trintech's staffing levels and management team are expected to stay largely unchanged following its sale.
Elsewhere, another Irish firm, also operating in the area of financial and compliance software, is attracting significant interest from a number of global players. Last Friday Norkom confirmed that it is in talks with a number of interested parties, which may lead to an offer for the firm. That offer could be around the EUR100 million mark, according to the Irish Independent. Interest in the Dublin-based firm, which develops software for the financial sector, is high. An approach by Israeli firm NICE Systems has prompted a number of other industry players to prepare counter-bids. Through its ownership of Actimize, NICE is Norkom's biggest competitor in the financial and compliance software market, and as the regulatory environment tightens within the financial sector, the market for dedicated software is primed for growth.
Accenture, Genband to create jobs
In more good news for the tech sector, two multinationals announced their plans to create 200 new Irish jobs between them. First up, on Tuesday, consulting firm Accenture said it will create 100 jobs over the next four years at a new centre in Dublin dedicated to predictive analytics, which is the use of statistics to help businesses forecast future revenues. Brian McCarthy, executive director of Accenture Analytics, said the company had already begun the recruitment process for the high-level research jobs, which will be filled by graduate to PhD-level candidates with a background in statistics, data management and related disciplines. These new jobs will take Accenture's workforce in Ireland to 1,400. In addition to management consultancy, Accenture provides technology services and outsourcing, and has more than 200,000 employees in 120 countries.
Separately, on Wednesday, US telecommunications firm Genband announced the creation of 100 new jobs in Galway over the next three years. The Texas-based firm is to invest EUR8 million to establish its international headquarters and business services centre in Galway. The new jobs will be primarily in the areas of finance, supply chain management, customer support, software development, HR, legal and administrative activities. The first of the 100 jobs will be created before Christmas. Genband provides digital infrastructure and services to the telecoms industry. It has operations in 50 countries worldwide.
Eircom revenue drops, profits flat
Eircom's financial year got off to a shaky start with its fiscal first quarter results revealing a continuing drop in revenue. For the quarter ending 30 September revenue was EUR442 million, down 5.6 percent on the EUR468 million for the year-ago quarter, while EDBITDA remained flat at EUR168 million. CEO Paul Donovan said the firm was feeling continued revenue pressures across all areas of the business, though the overall drop in revenue was offset somewhat by Eircom's ongoing cost-reduction measures, including layoffs. He said that employee headcount was cut by 117 during the three months, with pay and non-pay costs falling by 9 percent from last year.
It's difficult to see where any revival in Eircom's fortunes is going to come from. Even the firm itself doesn't see the situation changing any time soon: "Management sees no signs of growth or increased spending by customers. We do not anticipate this situation to change in the near to medium term," said Donovan. During the quarter Eircom lost 16,000 retail PSTN lines and 4,000 wholesale PSTN lines, while voice traffic fell by 12 percent. The firm added just 1,000 retail fixed broadband lines during the three months, lost 14,000 wholesale bitstream, and gained 16,000 wholesale LLU lines. Overall, Eircom's DSL broadband retail and wholesale stood at 695,000 customers at the end of September.
Within the mobile segment, Eircom released eMobile towards the tail end of September. The service doesn't replace Meteor but complements it, according to Eircom. Still, the Irish mobile market is extremely competitive, and coupled with the recent drop in ARPU across the board, Eircom said its mobile revenue and profit dropped during the quarter. At the end of September total mobile customers stood at 1,036,000. On the bright side mobile broadband customers stood at 45,000, up 28,000 from the year-ago quarter.
Overhanging all of this is Eircom's large debt. In a statement accompanying the results, Donovan said the group's current cash balance was EUR361 million at the end of September. However, net debt remains high and "in the absence of action by Eircom, the associated financial covenants may be breached within the coming twelve months. We continue to actively review our options".
Google facing EU investigation, eyes Groupon
Internet giant Google this week got news that EU regulators have launched a formal anti-trust inquiry into its search practices in light of allegations from other search engines that it abused its dominant position in the market. The formal inquiry follows an initial 10-month preliminary investigation that was triggered by complaints from rival firms that Google allegedly placed services provided by other search engines lower in its search results. The EU Commission will investigate whether Google has abused a dominant market position by "allegedly lowering the ranking of unpaid search results of competing services which are specialised in providing users with specific online content such as price comparisons... and by according preferential placement to the results of its own... services," the EU executive said.
"Given our success and the disruptive nature of our business, it's entirely understandable that we've caused unease among other companies and caught the attention of regulators," said Google in a blog post. It also stressed that "not every website can come out on top, or even appear on the first page of our results, so there will almost always be website owners who are unhappy about their rankings." The investigation is likely to continue well into 2011.
News of the EU investigation broke the day after speculation emerged that Google is in talks to buy local deals site Groupon. The internet has been abuzz with rumours that Google has offered around USD6 billion (USD5.3 million plus USD700,000 in performance bonuses) for the online coupon start-up. Groupon's board of directors will meet by conference call on Wednesday to decide how to proceed, according to one person familiar with the situation quoted by the Wall Street Journal. According to analysts quoted by the New York Times, Groupon has annual revenue of around USD500 million. The firm says it has 3,100 employees and claims to have 35 million subscribers worldwide. A deal with Groupon would put Google in the position of selling directly to internet users and boost its standing in the race for local business ad revenue, a market that is expected to grow rapidly. According to advertising research firm Borrell Associates, local online advertising in the US is expected to grow 18 percent, to USD16.1 billion, in 2011.
Caped Koala Studios has built a virtual world for kids, combining education and social networking 