EY  - View from the top: Q4 13 final view

View from the top: Q4 13 final view

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Aggregate sales growth eluded the top 100 global technology companies in the fourth quarter of 2013, and for the full year. Within that aggregation, however, there were innovative leaders who saw double-digit growth. Once again the five technology megatrends of smart mobility, cloud computing, social networking, big data analytics and accelerated adaptation sorted “winners” from “losers.”

But Q413 also appeared to set the stage for technology growth to come. IPO volume and value soared, leading to a “rush to list” in early 2014; the digital technology transformations sweeping through many industries grew; the so-called Internet of Things (IoT) achieved critical mass; multiple companies made structural changes; and the semiconductor sector continued an upturn we expect will soon spread.

Overall, aggregate sales for the top 100 global technology companies declined 1% YOY to $693 billion in Q413 and fell the same percentage for full-year 2013 (although the annual sales for 2012 and 2013 both round to $2.6 trillion). Considering the last two years, aggregate 2013 sales were less than 3% higher than in 2011. Aggregate operating income fared better for the top 100: it was $95 billion in Q413, a 4% YOY improvement, and $328 billion for full-year 2013 — 5% more than in 2012 and 13% more than in 2011.

Breaking down the 100 companies by growth rate suggests the direction of future growth opportunities. The 20 companies with the largest YOY sales gains by percentage in Q413 averaged 22% growth. Dominating the list were 7 of the 18 semiconductor companies and 6 of the 9 internet companies.

Top 100 technology companies’ key performance indicators (KPIs)

EY chart - Top 100 technology companies’ key performance indicators chart for Q413

Source: EY analysis of Capital IQ data, accessed 21 February 2014.

Q413 highlights

  • Aggregate sales for the top 100 global technology companies decline 1% year-over-year (YOY) to $693 billion in 2013’s fourth quarter. It’s the fourth consecutive quarterly decline on a YOY basis.
  • Top 100 aggregate operating income grows 4% YOY in Q413, to $95 billion.     
  • For the year, sales fall 1% but round to the same $2.6 trillion as in 2012; operating income grows 5% to $328 billion.
  • Digital technology transformations are sweeping through multiple industries, driven by the five innovative megatrends (mobile, social, cloud, big data analytics and accelerated technology adaptation). This suggests growth will return in 2014.
  • Technology IPO proceeds soar 444% in Q413, setting the stage for a “rush to list” in early 2014.
  • After a record-setting Q313, M&A disclosed value of the top 100 global technology companies declines sequentially to $9.7 billion in Q413, but is still up 34% YOY.
  • Top 100 company stock repurchases increase 52% YOY to $36.4 billion in Q413; dividends increase 9% YOY to $13.3 billion.
“The Internet of Things, powered by the five technology megatrends of mobile, social, cloud, big data analytics and accelerated adaptation, will likely cause a major increase in the blur between other industries and technology. Embedded sensors and the data they produce will increase the information technology content in all the products and services they interact with, in any industry.”

— Pat Hyek, Global Technology Industry Leader, EY

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