Branham launches the 2010 Edition of the Branham300

- Branham Group Inc. is pleased to launch the 2010 Edition of the Branham300, the most comprehensive and trusted source of information on the health of the Information and Communication Technology (ICT) Industry in Canada. Recognizing the Top 300 publicly-traded and privately-held Canadian ICT companies, the Top 25 Up and Coming Canadian ICT start-ups, and the Top 25 ICT Multinationals with operations in Canada, the Branham300 demonstrates the depth and breadth of innovative technology offered by Canadian companies and the contribution these organizations make to the economy both nationally and provincially.

"The Branham300 has constantly evolved and grown in an effort to provide ICT Industry stakeholders with the most accurate information on the happenings within the Canadian ICT Industry," said Wayne Gudbranson, President and CEO of Branham Group. "However, during its 17-year history, the vision behind the listing has remained the same – The Branham300 strives to raise the profile of the Canadian ICT Industry and recognize its leaders on both a National and International stage."

2009 – A Year of Opportunity and Hardship

Albeit turbulent, 2009 closed out an extremely successful decade for the Canadian ICT industry. The economic environment that developed in late-2008 and remained for much of 2009 resulted in a mix of opportunity and hardship for the Industry's leading firms, with the Top 250 companies appearing on this year’s Branham300 combining to generate $71.32 billion in revenue, down six per cent compared to 2008, but up 43 per cent compared to 2003; the first year that Branham compiled its Top 250 listing.

Merger and acquisition (M&A) activity and currency fluctuations played a prominent role in how this year's listing played out. Several leading Canadian players leveraged their healthy financial positions to expand inorganically and as a result climbed the ranks of the listing, while 13 companies generating approximate $500 million in revenues in 2008 could not return to the Top 250 in 2009 due to M&A activity and changes in organizational structure. The strong Canada-U.S. exchange rate, which fluctuated upwards throughout the year to close almost 20 cents higher than 2008, impacted companies on the list considerably. With more than half the list generating 20 per cent or more of its business south of the border, Canadian firms will face increased competition moving forward as the currency advantage that they enjoyed for much of the past ten years likely will not be present as the industry enters a fresh decade.

"The past 12-to-18 months proved to be challenging for all industries, and the Canadian ICT Industry was no exception," notes Gudbranson. "The economics of the Canadian ICT Industry have changed significantly and the players operating within it must adapt. Nevertheless, the leading firms within this Industry have overcome difficult business conditions in the past and combined to grow by more than 40 per cent since 2003, so I have no doubt that Canada's ICT Industry will bounce back and realize modest growth in 2010."

The Top Performers

When 2009 is looked back upon, it will be recognized as a transitional period for the Canadian ICT Industry. For the first time in seven years, the Top 250 crowned a new number one company. As Nortel Networks underwent aggressive restructuring, which eventually led to the sale of most of its major operating units, Research In Motion (RIM) capped off an impressive decade, in which it produced double-digit revenue growth in all but one year, to surge to the peak of the Top 250 listing. During its 2009 fiscal year the wireless solutions company increased its revenues by 84 per cent to $11.58 billion; mainly attributed to an 89 per cent increase in device sales and the addition of 11 million net-new subscribers.

The Big Three Canadian telecommunications firms all ranked in the top five in 2009. BCE climbed one position to land in the second spot on this year's list, generating $8.27 billon in revenue in 2009. Rogers Communications jumped three spots in 2009 to rank third, increasing sales by an estimated 8 per cent to $7.42 billion this year, while Telus boosted revenues by approximately 2 per cent to $6.86 billion ascending one position to the number four spot in 2009.

Leading this year's Top 10 in year-over-year growth were Shaw Communications and CAE, which both increased sales by 17 per cent. While Shaw Communications continues to plan its entry into the wireless space with the spectrum licenses it acquired during the 2008 Canadian Wireless Spectrum Auction, the company continues to grow its existing customer base allowing it to generate just under $2 billion in revenues this year. Meanwhile, CAE experienced annual revenue increases in each of its major operating segments, allowing the company to reach $1.66 billion in sales in 2009.

Three of Four Industry Sectors Realize Growth in 2009

Despite the Top 250 listing's overall decline in aggregate revenues, three of the four major ICT Industry sectors realized positive growth in 2009. The ICT Professional Services sector realized the sharpest increase in revenues compared to last year, as the 72 firms representing the sector on the Top 250 this year combined to generate $10.32 billion in revenues, up 21 per cent compared to 2008. The Software and x Service Provider sectors followed, increasing sales by 13 per cent and 3 per cent to $4.48 billion and $27.78 billion in 2009, respectively.

The ICT Hardware and Infrastructure sector was hit hardest in 2009, as existing and potential clients reduced overall ICT infrastructure spend and delayed major investments. As a result, combined revenues for the category fell 21 per cent this year to $28.75 billion, compared to $36.61 billion in 2008. Sector leaders did not fair any better, with the category's Top 25 companies generating $27.91 billion in sales, down 22 per cent compared to 2008.

Major Trends in 2009 and What to Expect in 2010

After a relatively quiet 2008, this past year marked the return of feverish M&A activity within the Canadian ICT industry, as several prominent deals took place: Open Text completed a mega-deal as it acquired U.S.-based Vignette, Groupe GFI Solutions purchased Fortsum Business Solutions (ranked 109 on last year's Top 250), Integrated Device Technology bought Tundra Semiconductor (ranked 59 on last year's Top 250) and Constellation Software continued its rapid expansion by acquiring 13 companies in 2009. Expect an abundance of M&A activity to continue in the Canadian ICT Industry in 2010 as companies in good financial standing look to capitalize on opportunities in an effort to expand customer bases, product portfolios and overall presence within the Industry.

Overall investment in research and development, sales and marketing, and other core activities took a significant hit in 2009 as companies entered maintenance mode for much of the year, focusing instead on near-term profitability and cash flow pressures. Much like the turn of the millennium, the events of 2009 have taught the Industry not to take the economic environment for granted. With the turmoil of the past year firmly entrenched in most firms recent memories, it is likely that companies will cautiously expand budgets and increase spend on existing projects, while carefully allocating resources to new and emerging technologies, that were pushed to the backburner throughout 2009. With newfound confidence and a somewhat optimistic economic outlook for the coming year, Branham expects moderate growth to return to the Canadian ICT industry in 2010.

For more information on the Branham300, the complete listing and accompanying analysis, please visit – www.Branham300.com.

About the Branham300

Entering its 17th year, the Branham300 highlights the top Canadian and Multinational ICT companies operating in Canada and is widely considered to be a leading source of intelligence on Canada's ICT industry. The Branham300 consists of the following major categories, ranked by revenue:

• Top 250 Canadian ICT Companies
• The Next 50
• Top 25 ICT Multinational Companies operating in Canada
• Top 25 Up and Comer ICT Companies (category ranked on innovation/not revenue)

The Branham300 is published annually in the April/May issue of Backbone Magazine, as well as on the Branham300 website, www.branham300.com.

About Branham Group Inc.

Branham Group is a leading industry analyst and strategic consulting firm servicing the global information technology marketplace. Branham Group assists information technology companies and related institutions in achieving market success through its custom consulting services (Planning, Marketing and Partnering), and through its multi-client research subscription programs (eHealth, Outsourcing, Green IT and Wireless). Branham also produces an annual listing of the top information technology companies in Canada (www.branham300.com), tracks the Canadian Outsourcing industry (www.branhamoutsourcing.com) and monitors over 450 eHealth vendors. For more information regarding Branham Group, please visit www.branhamgroup.com.

For further information, please contact:

Darren Anderson
Branham300 Coordinator & Research Analyst
613-745-2282 Ext. 122
danderson@branhamgroup.com

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