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The North America IT and High Technology Sectors : A Company and Industry Analysis (September 2007)
Mergent, Sep 2007, Pages: 32
This report looks at the IT and high-tech industries in the US and Canada, focusing on the IT services, computer equipment, software and semiconductor industries
Current Environment - Key Points
- The first eight months of 2007 yielded mixed results for the North American IT and high-tech industry as US credit woes threatened to halt economic growth in the US. Oil prices also resumed their upward trend while inflationary pressures stayed strong
- Despite volatile conditions within and outside North America, market optimism continued to persist as leading tech companies reported strong performances in the second quarter
- Aggressive expansion and merger and acquisition (M&A) activity continued to disrupt the North American ICT landscape but US credit woes are likely to have a negative effect on average deal values later this year. - After a long period of relative inertia, US tech IPO activity embarked on an upward trend as signs of a slowing M&A market began to emerge. - Canada-s IT and high tech industry was relatively bullish as Canada-s top tech companies generally performed well in the second quarter despite the uncertainty surrounding the US financial markets.
Industry Profile - Key Points
- The economic bubble created by excessive borrowing in the US home equity and subprime lending market finally burst, sending disruptive ripples throughout the US and global financial and consumer markets. - US tech sector equity financing in the first quarter showed a significant slowdown, shadowed by prospects of tighter borrowing costs in the months ahead. - Significant changes to the current H-1B cap and immigration policies surrounding the employment of foreign tech workers in the US do not appear likely to happen anytime soon, despite strong lobbying by both pro- and anti-immigration reform supporters
- Canadian ICT companies are taking advantage of the strong Canadian dollar to improve competitiveness by using higher ratios of imported components in production processes. - Recent data suggests that Canadian companies are placing greater emphasis on investing in new technologies and products. However, Canadian subsidiaries of foreign ICT companies continue to outspend domestic counterparts on R&D. - On May 17, Canada unveiled key features of the Federal Government-s Science and Technology Strategy which seeks to foster Canadian science and technology advantages in key strategic areas and set out a more focused roadmap for private and public sector research activities. Market Trends and Outlook - Key Points
- The performances of both the US and Canadian IT and high-tech markets are expected to improve as the North American IT and high-tech industry heads into the fourth quarter. - Partnerships between IT service providers and SaaS vendors may open corporate doors for on-demand and web-based applications to gain wider acceptance and legitimacy in an enterprise IT setting. - A portion of US airwaves up for auction early next year is generating much interest in the ICT sector because it will allow successful bidders to position themselves at the cusp of the ongoing convergence between media, broadcasting, telecom and IT services. - A spate of recent high profile acquisitions by the top three US web search and online content companies highlight increasing competition in the US online information and content market. - Green technology is becoming a major theme in North American ICT as more tech companies realize being environmentally friendly can positively affect company bottom lines and improve their public images
- Canadian software is set to show strong gains in 2007. The adoption and new investment trends are likely to be spurred by specific technologies, including SaaS, SOA, virtualization and mobility trends
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