Top 300 - 2009 Introduction
Even in tough times, the companies on the Branham300 list set a new revenue record
By Darren Anderson
The Canadian Information and Communication Technology (ICT) industry’s elite continued to push forward in 2008, capping off another year of combined growth. While the national and global economy dominated headlines and industries lined up to state their case for aid, companies appearing on the 2008 Branham300 surged on to set a new record for combined revenue, reaching $75.97 billion, an 18 per cent increase over 2007, although exchange rate fluctuations in the U.S. played a role for some.
After remaining on par with the U.S. dollar for the first half of 2008, the Canadian dollar steadily retreated over the final six months to close more than 20 cents lower than in 2007. With this dramatic shift and more recent stabilization of the currency, Canadian ICT firms may well benefit from increased exports and new opportunities going into 2009. Further, with a favourable exchange rate lowering the overall cost of Canadian labour to foreign companies, Canada’s attractiveness as a preferred ICT outsourcing destination to the U.S. and those abroad is likely to increase.
Merger and acquisition (M&A) activity slowed in 2008; 13 companies from last year’s Branham300 were purchased, as compared to 16 in 2007. As companies adjust and prepare for the period of economic uncertainty that continues to unfold in 2009, it remains to be seen whether they will wait out and weather the storm or take a more aggressive stance and capitalize on deals that may become abundant.
Over the course of 2008, the Branham300 experienced significant change, as more than 40 new companies made their way onto this year’s listing. Public companies hold a slight majority, accounting for 52 per cent of those listed, while private companies make up the remaining 48 per cent. This is in slight contrast to the 56 per cent public and 44 per cent private split from a year ago.
The average growth rate for companies appearing on this year’s listing is 22 per cent, compared to 44 per cent in 2007. While a noticeable decline, it is clear that the Canadian ICT industry displayed its resiliency in 2008 by maintaining positive growth in the face of a struggling economy when many other industries failed to do the same.
The revenue threshold for the 2008 Top 250 increased to $5.88 million, a $1.3 million increase over 2007. As the Canadian ICT industry continues to grow, so does the Branham300, and we were proud to introduce a new listing in 2008, The Next 50. For additional details, including the list of companies recognized in 2008, please visit www.branham300.com or at www.backbonemag.com/top300.
Results by region
The geographical breakdown of this year’s Top 250 ICT companies illustrates a shift in representation among Canada’s provinces. Ontario was the only province that saw a significant increase in 2008 (five per cent), accounting for 58 per cent of those listed in the Top 250. This increase is largely due to the fact that 26 of the 45 companies (58 per cent) that were new to this year’s listing are headquartered in Ontario. While Alberta’s representation (10 per cent) remained relatively static in 2008, B.C. and Quebec fell in their representation by two per cent each, coming in at 14 and 13 per cent, respectively.
Alberta led all provinces with 21 per cent year-over-year revenue growth in 2008, representing three per cent of the list’s total revenues. Companies headquartered in Ontario and B.C. contributed 60 per cent and 12 per cent, respectively, of the Top 250’s total revenues, with both provinces experiencing revenue growth of 11 per cent compared to 2007. Quebec brought in the remaining 20 per cent of the listings’ total revenue this year, realizing seven per cent revenue growth in 2008.
Performance by category
The Top 250 is comprised of the following four major categories: Software (86 companies), IT Professional Services (73 companies), IT Hardware and Infrastructure (57 companies) and xSPs (34 companies). (xSP refers to various types of Service Providers, including Internet, managed, application, storage, etc.) Three of the four categories experienced increased representation in 2008, led by the IT Professional Services category, which saw six additional companies appear on this year’s Top 250.
Two categories propelled the Canadian ICT industry forward in 2008. The IT Hardware and Infrastructure category, representing 48 per cent of the Top 250’s revenues, generated $36.6 billion in 2008, a 32 per cent increase over 2007. The xSP category maintained positive revenue growth despite a four per cent decline compared to 2007, increasing revenue by nine per cent in 2008 to reach $26.86 billion. The big players in both categories were the drivers of growth this year, as they experienced significant combined revenue increases over the course of 2008. The Top 25 IT Hardware and Infrastructure companies exhibited year-over-year growth of 12 per cent in 2008, and 33 per cent growth compared to last year’s category leaders. Further, the Top 10 xSPs generated 98 per cent of the category’s total revenues. The group increased revenues by nine per cent year-over-year and 13 per cent compared to those listed in 2007.
The top performers
Last year’s Top 10 companies dominate the list again this year, solidifying their status as clear leaders in the Canadian ICT industry. In 2008, these companies increased their share of the Top 250’s total revenues, contributing a combined 77 per cent, while the other 240 companies represent the remaining 23 per cent.
For the sixth consecutive year, Nortel Networks held its position as the top ranked company by gross revenue in the Canadian ICT industry. Despite well-documented struggles throughout 2008, which eventually led to its January 2009 bankruptcy protection announcement, Nortel generated $12.7 billion in revenue. Celestica ranked second, maintaining its 2007 position despite experiencing a four per cent decline in revenues in 2008. BCE rounded out the top three for the fifth consecutive year, achieving year-over-year growth of seven per cent in 2008. Research In Motion made the biggest move among the Top 10, experiencing revenue growth of 98 per cent, allowing it to jump three spots to land in this year’s fourth position.
2008 trends, and what to expect in 2009
Major M&A deals took a backseat to acquisition activity in the SMB segment of the Canadian ICT industry in 2008. Companies striving to cut upfront infrastructure investment and manage recurring costs turned to cloud computing and virtualization in 2008, while Software-as-a-Service (SaaS) and Web 2.0 continued to evolve and become more highly adopted technologies. The wireless industry is expected to see increased activity in 2009, as the competitive landscape changed following the conclusion of the Advanced Wireless Services spectrum auction. Social networking and green IT remained top of mind in 2008, and will continue to remain so as companies try to manage their brand and limit their environmental impact in 2009 and beyond.
The economic pressures that became apparent in mid-2008 will continue to impact the Canadian ICT industry throughout 2009. Companies will look for new ways to insulate themselves from the economic shock while continuing to innovate and produce goods that will foster spending, all in an effort to survive and emerge successfully from market forces that are not yet fully understood. It is important to note that it was not long ago that the Canadian ICT industry overcame adversity to emerge stronger and more innovative than ever before; 2009 will similarly be a survival of the fittest.
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By Darren Anderson The Canadian Information and Communication Technology (ICT) industry’s elite continued to push forward in 2008, capping off another year of combined growth. While the national and global economy dominated headlines and industries lined up to state their case for aid, companies appearing on the 2008 Branham300 surged on to set a new record for combined revenue, reaching $75.97 billion, an 18 per cent increase over 2007, although exchange rate fluctuations in the U.S. played a role for some.
After remaining on par with the U.S. dollar for the first half of 2008, the Canadian dollar steadily retreated over the final six months to close more than 20 cents lower than in 2007. With this dramatic shift and more recent stabilization of the currency, Canadian ICT firms may well benefit from increased exports and new opportunities going into 2009. Further, with a favourable exchange rate lowering the overall cost of Canadian labour to foreign companies, Canada’s attractiveness as a preferred ICT outsourcing destination to the U.S. and those abroad is likely to increase.
Merger and acquisition (M&A) activity slowed in 2008; 13 companies from last year’s Branham300 were purchased, as compared to 16 in 2007. As companies adjust and prepare for the period of economic uncertainty that continues to unfold in 2009, it remains to be seen whether they will wait out and weather the storm or take a more aggressive stance and capitalize on deals that may become abundant.
Over the course of 2008, the Branham300 experienced significant change, as more than 40 new companies made their way onto this year’s listing. Public companies hold a slight majority, accounting for 52 per cent of those listed, while private companies make up the remaining 48 per cent. This is in slight contrast to the 56 per cent public and 44 per cent private split from a year ago.
The average growth rate for companies appearing on this year’s listing is 22 per cent, compared to 44 per cent in 2007. While a noticeable decline, it is clear that the Canadian ICT industry displayed its resiliency in 2008 by maintaining positive growth in the face of a struggling economy when many other industries failed to do the same.
The revenue threshold for the 2008 Top 250 increased to $5.88 million, a $1.3 million increase over 2007. As the Canadian ICT industry continues to grow, so does the Branham300, and we were proud to introduce a new listing in 2008, The Next 50. For additional details, including the list of companies recognized in 2008, please visit www.branham300.com or at www.backbonemag.com/top300.
Results by region
The geographical breakdown of this year’s Top 250 ICT companies illustrates a shift in representation among Canada’s provinces. Ontario was the only province that saw a significant increase in 2008 (five per cent), accounting for 58 per cent of those listed in the Top 250. This increase is largely due to the fact that 26 of the 45 companies (58 per cent) that were new to this year’s listing are headquartered in Ontario. While Alberta’s representation (10 per cent) remained relatively static in 2008, B.C. and Quebec fell in their representation by two per cent each, coming in at 14 and 13 per cent, respectively.
Alberta led all provinces with 21 per cent year-over-year revenue growth in 2008, representing three per cent of the list’s total revenues. Companies headquartered in Ontario and B.C. contributed 60 per cent and 12 per cent, respectively, of the Top 250’s total revenues, with both provinces experiencing revenue growth of 11 per cent compared to 2007. Quebec brought in the remaining 20 per cent of the listings’ total revenue this year, realizing seven per cent revenue growth in 2008.
Performance by category
The Top 250 is comprised of the following four major categories: Software (86 companies), IT Professional Services (73 companies), IT Hardware and Infrastructure (57 companies) and xSPs (34 companies). (xSP refers to various types of Service Providers, including Internet, managed, application, storage, etc.) Three of the four categories experienced increased representation in 2008, led by the IT Professional Services category, which saw six additional companies appear on this year’s Top 250.
Two categories propelled the Canadian ICT industry forward in 2008. The IT Hardware and Infrastructure category, representing 48 per cent of the Top 250’s revenues, generated $36.6 billion in 2008, a 32 per cent increase over 2007. The xSP category maintained positive revenue growth despite a four per cent decline compared to 2007, increasing revenue by nine per cent in 2008 to reach $26.86 billion. The big players in both categories were the drivers of growth this year, as they experienced significant combined revenue increases over the course of 2008. The Top 25 IT Hardware and Infrastructure companies exhibited year-over-year growth of 12 per cent in 2008, and 33 per cent growth compared to last year’s category leaders. Further, the Top 10 xSPs generated 98 per cent of the category’s total revenues. The group increased revenues by nine per cent year-over-year and 13 per cent compared to those listed in 2007.
The top performers
Last year’s Top 10 companies dominate the list again this year, solidifying their status as clear leaders in the Canadian ICT industry. In 2008, these companies increased their share of the Top 250’s total revenues, contributing a combined 77 per cent, while the other 240 companies represent the remaining 23 per cent.
For the sixth consecutive year, Nortel Networks held its position as the top ranked company by gross revenue in the Canadian ICT industry. Despite well-documented struggles throughout 2008, which eventually led to its January 2009 bankruptcy protection announcement, Nortel generated $12.7 billion in revenue. Celestica ranked second, maintaining its 2007 position despite experiencing a four per cent decline in revenues in 2008. BCE rounded out the top three for the fifth consecutive year, achieving year-over-year growth of seven per cent in 2008. Research In Motion made the biggest move among the Top 10, experiencing revenue growth of 98 per cent, allowing it to jump three spots to land in this year’s fourth position.
2008 trends, and what to expect in 2009
Major M&A deals took a backseat to acquisition activity in the SMB segment of the Canadian ICT industry in 2008. Companies striving to cut upfront infrastructure investment and manage recurring costs turned to cloud computing and virtualization in 2008, while Software-as-a-Service (SaaS) and Web 2.0 continued to evolve and become more highly adopted technologies. The wireless industry is expected to see increased activity in 2009, as the competitive landscape changed following the conclusion of the Advanced Wireless Services spectrum auction. Social networking and green IT remained top of mind in 2008, and will continue to remain so as companies try to manage their brand and limit their environmental impact in 2009 and beyond.
The economic pressures that became apparent in mid-2008 will continue to impact the Canadian ICT industry throughout 2009. Companies will look for new ways to insulate themselves from the economic shock while continuing to innovate and produce goods that will foster spending, all in an effort to survive and emerge successfully from market forces that are not yet fully understood. It is important to note that it was not long ago that the Canadian ICT industry overcame adversity to emerge stronger and more innovative than ever before; 2009 will similarly be a survival of the fittest.
PDF version (3MB)
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