BUSINESS
Year in review 2010: Signs of new life among corporates
28-12-2010
by Sylvia Leatham
Many corporate tech firms reported positive numbers this year - but was it a sign of genuine growth?
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After a bad couple of years for most industries, the tech sector was one of the first to show signs of recovery, with chip sales, PC shipments and mobile phone sales all generally on the up in 2010.
Indeed, 2009 ended on a fairly positive note for some sectors of the global tech industry, with Nokia predicting worldwide handset sales would grow around 10 percent in 2010, semiconductor sales continuing to show growth, and PC shipments seeing their first quarter of double-digit growth since Q3 2008.
Positive start
Hopes of a global recovery continued in early 2010, with the first round of tech sector results in January indicating healthy numbers for the bellwether firms. Chip giant Intel posted an almost 10-fold increase in profit for its fourth quarter and a 28 percent rise in revenue, citing strong consumer demand for the laptops that carry its chips. Apple posted a noteworthy 50 percent rise in Q1 profit, thanks to healthy sales of its iPhones and Macs, while internet giants Google and Yahoo also posted good numbers – Yahoo having its best quarter since new CEO Carol Bartz came on board.
The positive vibe continued to flourish through the springtime, as AMD, IBM, SAP and EMC flew the flag for a return to economic stability with their April results. And companies with three-letter names weren't the only ones doing well: Google, Apple, Microsoft, Amazon and Infineon all posted solid quarterly numbers.
The renewed confidence in the tech sector experienced a shudder around the middle of the year, however, with tech, internet and mobile stalwarts such as Yahoo, IBM and Nokia all posting underwhelming results, with sluggish revenues. Nonetheless, things were looking up again by the third quarter, with strong results posted by Intel, Apple, Microsoft and Google, and only Cisco spoiling the mood among the big players with a weak outlook for 2011.
Commitment to growth
While 2009 was notable for severe job cuts in the global tech sector as companies desperately tried to shore up their finances, this year there were signs of a commitment to genuine growth among the big IT firms. We may not have seen an abundance of green shoots this year, but many were busy sowing seeds for next year's harvest, or exploring new ground to plant. Many of the big firms took the opportunity to reshuffle their management board, some looked for new markets by getting acquisitive, and a few even contemplated IPOs.
This year was the most notable for some time in terms of management shake-ups and executive exits. The most talked-about departure of the year had to be Mark Hurd's exit from HP, under the shadow of a scandal involving a relationship with a contractor and expense violations. Hurd swiftly joined his pal Larry Ellison at software maker Oracle, while former SAP CEO Leo Apotheker took up the reins at HP.
Meanwhile, Apple senior vice president for mobile devices, Mark Papermaster, left the firm only 15 months after jumping ship from IBM. Sources quoted by the Wall Street Journal suggested it was no coincidence that Papermaster's departure came shortly after Apple's 'antenna-gate' problems with the iPhone 4.
Other tech heavyweights rang the changes at board level too. Nokia instigated a major management reshuffle, Twitter and Skype got new CEOs, Microsoft saw several key execs depart, and Yahoo witnessed a flurry of exits in the latter half of the year.
Big deals
While the downturn of the past couple of years continued to keep a tight lid on company coffers this year, there were a couple of major deals, and even talk of IPOs, to get investors' hearts racing. Things were fairly quiet in the first half of the year, but then in August a slew of major deals was announced: Intel made a trio of investments by purchasing security firm McAfee, chip firm Texas Instruments' cable modem product line, and Infineon's wireless chip operations; HP acquired security software firm Fortify; and IBM bought ad software company Unica.
August was also the month when the battle for data storage firm 3PAR began, with Dell and HP waging a frantic bidding war for the smaller firm. HP eventually emerged triumphant, while 3PAR watched its share price triple over the course of two weeks. Later in the year Dell sealed a deal to buy a different storage firm, Compellent, for nearly USD820 million.
Google got busy in late summer too, making a number of purchases in the social media space, including social widget firm Slide, social games company SocialDeck and intelligent search firm Angstro.
Market plans
Meanwhile, after a fallow couple of years, there was talk of a few major IPOs. Skype finally revealed its plans for a stockmarket listing, saying it planned to raise up to USD100 million, although its plans to float were delayed until 2011.
While rumours abounded that YouTube rival Hulu would soon announce plans for an IPO, two of China's big online video firms, Youku and Tudou, announced their own plans late in the year to list on US markets.
Meanwhile, analysts and investors continued to watch closely for news of what will perhaps be the biggest tech IPO in years -- but Facebook indicated it could remain unlisted until at least 2012.
Expect to see more acquisitions and IPOs in 2011 as the global economic recovery continues.
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