On a call on Thursday on quarterly expectations across 26 software and services sectors, Corum analysts reviewed IT deals and trends over the last four months, as well as thoughts on what’s ahead, including the impact on new federal legislation on the tech industry.
Corum registered 893 deals in first quarter, only three more than in that same quarter in 2011, which is keeping in line with expectations of 2012 to stay consistent with last year. Big moves in the first three months of 2012 were made by Cisco in a $5 billion pitch for video software provider NDS, and Dell announcing a buy of data protection and network security provider SonicWall.
In all, Corum stands by its expectations from earlier this year that 2012 will witness about 3,800 deals, just slightly more than last year, but with a jump in value of about 13 percent to $250 billion compared with 2011.
Growth across the software and services sectors is space varied, with Apple and Oracle submitting large earnings gains over the last three months and predictions that IBM’s super analytics computer Watson could generate $2.65 billion in revenue by 2015.
But the strongest growth over the last few months has been in the IT services segment. As-a-service notched 8.5 percent market valuation growth over the last quarter of 2011, as managed offerings are increasingly seen as a viable and cheaper alternative to in-house software, according to Elon Gasper, VP of research at Corum. SaaS has particular interest with human capital management and governance offerings – Corum pointed to deals like Symantec’s buy of LiveOffice – and changing regulation in the health care industry has opened up more interest in that space as well, Corum stated. Gasper says that there is a growing frenzy of transactions expected through 2012 for the range of offerings in the on-demand and as-a-service areas.
“There are some real wars going on there” to acquire providers, he says.
There may also be a spike in startups and niche buyouts in the tech industry in part from new federal business legislation. Last week, President Obama signed the bipartisan supported JOBS Act, which is mean to encourage investment and cut regulation for firms that make an initial public offering. Corum noted on the call Thursday that the impact of the JOBS Act would particularly ripple through tech software and services startups, enabling more to raise private money for a longer period of time. In turn, Corum anticipates more niche providers to follow through on their business plans and reach IPOs, adding to the pool of merger and acquisition candidates by larger providers.
For a rebroadcast of the presentation and other quarterly info from Corum, click here.