Citi Treasury and Trade Solutions
16
It is difficult to stay ahead of ever-evolving
technology and the industry is restructuring to
meet this challenge.
Treasurers in the industry are embracing new
growth opportunities and prudently navigating
their companies through restructuring projects
that aim to increase shareholder value. As
treasurers meet these challenges, we see a
number of trends emerge:
•
Using deregulation to redeploy capital
to or
from liberalizing markets to improve returns
and boost growth
•
Increasing acquisition activity
in areas such
as software, mobile technology, eCommerce,
data analytics, security and cloud technology
•
Divesting lower margin businesses
as
multinationals realign their focus and
emerging market buyers look to acquire
market share
•
Restructuring
resulting in company
separations, spin-offs, and delisting to increase
value, be more nimble and remain innovative
•
Expanding working capital programs
to
free up cash or increase sales by offering
competitive funding to suppliers and distributors
Search for Growth: Embracing Opportunities
in the Technology Sector
The technology industry weathered the global recession by retaining liquidity and cutting costs,
and has emerged leaner and more cash rich. Post-recession, this strategy is now challenged by
lower returns on capital and years of under investment in research and development. Despite
these challenges, earnings have grown beyond pre-recession levels. However, whilst earnings
have grown, price-to-earnings multiples have reduced by 42%
1
, indicating an industry slowdown.
Nick Howden
Asia Pacific Technology,
Media and Telecom
Sector Head
Treasury and Trade
Solutions, Citi
1
S&P Technology index since 2010
