Taking a look at the Top 250 and the ICT industry   |  March 18, 2008  

 

 

Geographic distribution of results
The geographic distribution of companies appearing in the Top 250 remained relatively static in 2007, compared to the figures reported last year. The representation of companies headquartered in Ontario on the Top 250 has decreased slightly to 53.6 per cent from 55.6 per cent last year. This change could be attributed to the acquisition of some large Ontario companies (which were previously included in the listing) by foreignowned companies, such as the acquisition of ATI Technologies by Advanced Micro Devices (AMD). In other cases, however, the acquired companies were purchased by Ontario peers. There is very little change in the composition of the Atlantic Provinces, although Newfoundland reappears on the listing this year with 0.8 per cent of companies based there. The figure for Quebec, a slight decrease of 0.4 per cent from last year, and small increases in representation in Alberta and British Columbia (0.4 per cent each), remain on par with last year’s results.

In accordance with the geographic distribution of companies, Ontario firms accumulated 57.7 per cent of total revenues earned by the Top 250 companies. Quebec, B.C. and Alberta companies account for 22.01, 13.12 and 3.28 per cent, respectively. These figures are proportionately higher than last year.

In contrast, provincial year-over-year revenue growth is dramatically different from previous results.

Performance by category
The Top 250 consists of companies from four categories: 96 in the Software category, 67 within IT Professional Services, 54 in IT Hardware and Infrastructure, and 33 in xSP. Companies that participate in the Branham300 are also free to apply to any of the following sub-categories, as applicable: IT Security, Wireless Solutions and, new this year to the Branham300, Healthcare IT companies. The Top 10 companies in the sub-categories are also ranked based on fiscal year-end revenues.

Industry Canada divides the Canadian ICT sector into two sub-classifications by the North American Industry Classification System (NAICS): ICT services and ICT manufacturing. According to its statistics, the manufacturing sub-sector has experienced 18 per cent growth in GDP since 2005, leading to the third quarter of 2007, where it fell by just 0.8 per cent. The IT Hardware and Infrastructure companies on the Top 250 generated the highest revenues of any Branham300 category at $27.72 billion, a yearover- year decrease of 14.9 per cent compared to last year’s list. This decline can largely be attributed to the loss of companies previously listed, which were either acquired or changed their business focus. The Top 25 Hardware companies in this year’s listing showed combined growth of 2.15 per cent.

The IT Professional Servicesgrouping brought in $8.5 billion in combined revenues, exhibiting the highest year-over-year growth of all Branham300 categories at 14.24 per cent. The highest revenue-generating Branham300 category, of those classified in Canada’s ICT services sub-sector as defined by Industry Canada, is the xSP category, with $23.91 billion in combined revenues, a 12.59 per cent growth year over year.

Top performers
The composition of this year’s Top 10 companies appearing in the Top 250 list is similar to last year’s, with just two new companies. Nortel, Celestica and BCE take the top three spots respectively for the fourth consecutive year, while Nortel celebrates its fifth consecutive year as the Canadian firm generating the most revenue. However, the race was significantly closer this year, with Nortel and Celestica reporting revenue decreases of 4.58 and 9.1 per cent over 2006, respectively.

Significant trends
Merger and acquisition activity was high in 2007, a trend expected to continue into 2008. The financial impact of much of the activity in fiscal 2007 will be depicted next year, once the fruits of these acquisitions are realized. Cognos, in the number 12 position, is to be acquired by IBM in the first quarter of 2008. Notably, this will be the last year of inclusion for DataMirror, also acquired by IBM on Aug. 31, 2007.

In total, 16 companies from last year’s Top 250 were acquired in fiscal 2007. Industry peers in the pure-play software sector are consuming one another, while major players seek to expand their offerings through merger and acquisition activity.

A number of trends observed in 2006 continued into 2007, such as adaptive security, software as a service (SaaS) and Unified Messaging and Communications. In addition, some new trends emerged in 2007 that are expected to have an impact in 2008. Green IT is a going concern, as firms strive to limit the environmental impact of their operations. As consumers and corporations alike seek timely and immediate information, social networking and RSS feeds, as well as wikis and all-in-one devices such as Apple’s iPhone will become increasingly available and adopted by households and corporations. As such, IT security needs have shifted to mitigate the privacy risks associated with the portability and accessibility of corporate IT and personal IT.


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