This quarterly global snapshot of activity in the technology sector highlights trends, business challenges and opportunities. In this edition we review the fourth calendar quarter of 2014.
Fourth-quarter results for the technology sector were mixed. Overall, EMS/Distributors, Internet and Semiconductor companies generally outperformed Communications, Consumer electronics, Software, Software services and Hardware companies. However, across all technology sectors, there were many companies that suffered either in terms of revenue or in terms of profit. The reasons often stood at extremes—losses from discontinued operations to high operating expenses from new acquisitions. Moreover, problems such as currency volatility, geopolitical unrest and changes in accounting policies also affected a number of companies in the sector.
The hardware market has firmed up, with PC shipments witnessing a recovery after over two years of decline. Growth was led by mobile PCs, which includes notebooks and laptops with detachable screens—also referred to as 2-in-1 computers. Software services again posted strong results, with the value of mega-relationships (contracts over US$100mn) increasing by 354% and the value of restructured contracts rising by 77% compared to the third quarter.
With volatility moderating, the outlook remains positive with the PMI (Purchasing Managers Index) pulling back only slightly in Q4 to 56.9. US markets have also remained strong, with the Dow Jones Industrial Average breaking the 18,000 level in December. Against this backdrop, the technology sector maintained a strong IPO pace, recording 34 new IPOs in Q4’14. In terms of proceeds, US$7.5bn was raised, a 33% improvement over the last quarter of 2013.1
Detailed financial information can be accessed by clicking on the "explore tool" on the home page at www.pwc.com/techscorecard.