Technology Sector Scorecard

Technology Sector ScorecardQ2 2016

www.pwc.com/techscorecard

PwCTechnology Sector Scorecard

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Q2 2016 Executive summary


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Q2 2016 Executive summary

• The technology sector posted year-over-year and quarter-over-quarter growth of 4.2% in the second quarter of 2016. Year-over-year performance by subsector:

The tech industry delivered a mixed performance amid uncertain markets and the surprising Brexit outcome

Internet + 21.5%

Software + 5.0%

Semiconductors + 4.7%

Software services + 1.6%

EMS - 1.1%

Consumer Electronics - 1.0%

PC & Systems Hardware - 3.4%

Communications - 3.6%


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• Despite volatility in the financial markets and the Brexit vote, half of the technology subsectors posted positive results in the second quarter, led by Internet companies.

• The growth in the Internet subsector was a major boost for the technology sector. With an increased focus on the digital economy, companies in this segment have abundant opportunity to expand and advance. Led by Amazon, the sector posted a strong second quarter, with an increase in average revenue of 22% year on year and 9% sequentially.

• E-commerce is one of the leading drivers of the Internet subsector and e-commerce sales in the second quarter of 2016 accounted for 8.1% of total retail sales.. In the US, retail e-commerce sales reached US$97.3 billion in Q2, an increase of 4.5% from Q1 2016.1 The ranking of the top five Internet retailers globally includes two companies based in the US, two from China and one from Europe. Companies such as Rakuten, Amazon and Alibaba are attracting online customers through their online marketplaces, but local and regional players are increasingly giving stiff competition to the global leaders.2

• Two other subsectors posted strong Q2 results, Software and Semiconductors. Both are benefiting from the rapid advances in analytics, IoT and artificial intelligence as well as consumer use of mobile devices and cloud services. Software Services, also posting positive Q2 revenue growth, is seeing a significant shift from traditional licensing to software-as-a-service outsourcing. In Q2, software-as-a-service revenue grew 45% compared to a decline of 17% for traditional outsourcing.3

Q2 2016 Executive summary (continued)

1. https://www.census.gov/retail/mrts/www/data/pdf/ec2. www.businesswire.com, July 20163. The Global ISG (Information Services Group)

Outsourcing Index, July 2016


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• Britain's vote to exit the European Union rattled the financial markets and world economy in Q2.Further, the US economy grew at 1.2%, a slower-than-expected in the second quarter, even with a surprisingly robust consumer spending increase of 4.2%. US inventories were reduced by US$8.1 billion, the first drop since the third quarter of 2011, and exports grew despite overall weak global demand. Sound performance in many US industries, including technology, healthcare and financial services, as well as a relatively strong real estate market in many parts of the country contributed to increased consumer spending.4

• China’s economy grew at its slowest quarterly pace in seven years in Q2, posting 6.6% growth. Two factors weighed on the economy, first, Beijing's efforts to reduce the country's dependence on manufacturing and encouraging the service sector, and second, the high levels of debt after years of aggressive lending.5 In response to slow growth and declining private investment, Chinese policymakers have taken stringent steps to prevent widespread job losses and debt default.

• In the Eurozone, after posting strong results in the first quarter, economic growth slowed in the second quarter with the French economy going into a stall. The GDP of 19 countries that use the Euro moved up 0.3% quarter over quarter, half of the growth recorded in the first three months of 2016. Year-over-year growth of 1.6% in the second quarter was virtually the same as the 1.7% growth posted in the first quarter.6


4. CNBC, July 20165. CNN Money, July 20166. Euronews, July 2016


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• Driven by increasing oil prices and thus a rise in energy stocks, the Dow Jones Industrial Average (DJIA) began the quarter at 17,792.75 and advanced even in the face of weakening economic data and uncertainty caused by the UK’s vote to exit the European Union. Despite registering a 6% drop on the initial shock of Britain exiting the EU, the DJIA reclaimed nearly half of the post-Brexit losses before the close of the quarter settling at 17,929.99.7

• The Shanghai Composite Index started the quarter at 3,009.53, falling below the key 3,000 level in the beginning of the quarter. The sudden selloff among investors was mainly sparked by short-term liquidity pressures and poor first quarter results from many companies. The Index further declined steeply in the beginning of May to 2832.113 as a result of a weak US jobs report and less than expected trade numbers in China. The country’s exports fell 1.8% in April, but imports also fell by 10.9% when compared to the same period in 2015. However the Shanghai Composite finished the quarter on an uptick at 2929.61 following manufacturing data reports matching forecasts and services activities witnessing an increase.8

• Amidst this market uncertainty, M&A activity continued. Microsoft entered into a definitive agreement to acquire LinkedIn for US$196 per share in an all-cash transaction valued at US$26.2 billion. Verizon Communications Inc agreed to pay US$4.8 billion to acquire Yahoo Inc. The price includes Yahoo’s core Internet business and some real estate. CSC has announced that it has unanimously approved a plan to merge the company with the Enterprise Services segment of Hewlett Packard Enterprise (HPE), and shortly after the end of the second quarter, Softbank announced it will acquire ARM holdings for US$32 billion.


7. NASDAQ, June 20168. Marketwatch, April 2016; International Business Times,

May 2016; Bloomberg, July 2016


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• The global technology IPO market also showed signs of life, posting 40% sequential growth from 10 IPOs in Q1 to 14 IPOs in Q2, and a 92% increase in total proceeds from US$769 million in Q1 to US$1.48 billion. Year over year, Q2 2016 still saw a 61% decline from 36 IPOs and a 76% decline in total proceeds from US$6.16 billion in Q2 2015.9

• The second quarter PMI (Purchasing Managers Index) stood at 51.8%, an uptick of 1.9% over the previous quarter, driven by new orders, increases in production and employment, contracting inventories and slower supplier deliveries.10


9. Q2 Global Tech IPO Review, PwC10. Presswire.com, July 2016


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Source: ISM

52.9

51.0

51.4 54

.6 58.2

56.2

54.4 57

.0 61.0

56.4

51.0 52

.453

.352

.750

.350

.6 52.9

50.2

55.8

56.5

53.7 55

.2 57.6

56.9

52.6

52.6

51.3

51.8

30

35

40

45

50

55

60

65

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16

2Q16

Quarter

Recession Threshold (42.7)

The Purchasing Manager’s Index (PMI®) went above the 50 threshold to 51.8% in Q2 2016, signaling a turn-around and a modest expansion in manufacturing after a gap of two quarters.

US Purchasing Manager’s Index (PMI®) trendsQ2 2007 – Q2 2016


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Snapshot by subsector

Communications


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Market analysisCommunications• The Communications sector posted a fair performance in Q2 2016, with companies reporting a

positive quarter-on quarter-growth of 9.4% in terms of revenue and 175.7% quarter-on-quarter growth in terms of net income, which was largely driven by Motorola. The year-on-year revenue for the sector declined by 5.8%, however, and the net income dropped by 88.1%, primarily due to decline in net income for Nokia. Motorola Solutions reported the highest revenue growth, followed by Ericsson. Motorola’s quarter-on-quarter growth of 20% was driven by an upside in the revenue from the Services segment, which included sales from the recently acquired GDCL. The acquisition of GDCL provided US$146 million in Q2 2016 compared to that US$61 million in Q1 2016 of net sales within the EMEA region. Ericsson’s quarter-on-quarter revenue increased by 6.7%, mostly due to an increase in revenue from the Middle East and Mediterranean geographies.

• The second quarter was quite active in terms of technology developments for the sector. Nokia partnered with Singapore's StarHub to provide its customers with 4G upload speeds of 150Mbps with the help of its 4G LTE-Advanced technology. Nokia's carrier aggregation technology, which aggregated spectrum in the 1800MHz and 2600MHz bands, together with 64 QAM, has made it viable to achieve the incredible speed.1

• Q2 2016 also saw additional launches of software-defined WAN services (SD-WAN) by network operators serving the enterprise market. In June 2016, CenturyLink joined AT&T and Level 3 with the launch of a new SD-WAN service for multi-site enterprises that offered IT managers the ability to monitor and control WAN performance themselves. These solutions are typically shipped with software-based CPE (Customer Premises Equipment), enabling greater flexibility than traditional solutions have offered.2

1. Nokia News Release, July 2016 2. Cartesian Industry Predictions: Q2 2016 Update


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Market analysis (continued)Communications• Another development includes how LTE is driving the Communications sector through VoLTE.

VoLTE will expedite small-cell adoption as mobile carriers have started to roll out VoLTE in increasing numbers, with more than 100 LTE operators offering VoLTE service by end 2016.5

The move will further be affected by the operators intent to turn off their older 2G and 3G networks. Vendors are increasingly looking to capture this opportunity by selling their solutions directly to venue and enterprise owners, leveraging existing relationships with these businesses. Ericsson partnered with HP with the intent to sell through HP's enterprise channels. Similarly, Cisco leveraged its large WLAN enterprise footprint as a platform for selling small cells. The advent of 5G in the near future will further fuel small-cell growth.3

• The next evolution in the Communications sector is 5G. Standardization of 5G first started by the International Telecommunication Union in 2012, but the availability of ultra-high frequency spectrum by the Federal Communications Commission in 2016 is a significant milestone for the sector. With the digital wave sweeping over companies across industries and the proliferation of mobile technologies, vendors are working hard to commercialize 5G. The technology will provide quantum leaps forward in three key areas: speeds resembling fiber that are at least 10 times and maybe 100-times faster than today’s 4G LTE networks; responsiveness in less than one-thousandth of a second, which enables real-time communication; and network capacity multiples of what is available presently.4

• Mobile carriers and wireless companies are developing platforms for initial tests. 5G will be built on the foundation created by 4G LTE. 5G is expected to benefit mobile and smartphone users as well as thousands of internet-connected devices that are entering the everyday world.5

3. Light Reading, Aug 2016 4. Telecoms Tech, July, 20165. ITwire, Aug 2016


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Market analysis (continued)Communications• Despite these developments, revenue for Nokia in Q2 2016 was US$6.4 billion, a 9% decline year

on year when compared with the US$7 billion in combined revenue Nokia and Alcatel-Lucent would have reported in the second quarter last year. The decline in sales was largely due to a weak performance within Ultra Broadband Networks, and accounted for approximately 80% of the overall decrease in Nokia's Networks business. IP Networks and Applications also contributed to the decrease. The net profit declined steeply by 327% year on year primarily due to increase in the company’s operating expenses. The increase in R&D expenses and SG&A expenses was attributable to Nokia’s Networks business. Nokia’s other income and expenses included an expense of €643 million in the second quarter 2016. The amount was comparatively higher than the last year, primarily due to higher restructuring costs and associated charges as well as the recording of certain provisions due to the risk of asset impairment as a Latin American customer was undergoing judicial recovery.6

6. Nokia earning’s release Q2 2016, Aug 2016


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Market analysis (continued)Communications• In contrast, Motorola Solutions sales for Q2 2016 increased 4.5% year on year to US$1.4 billion.

Revenue was positively impacted and included US$146 million in sales associated with the Airwave acquisition. The company’s sales grew by 19.9% quarter on quarter, due to increased revenues from both the Products and Services segments. The inclusion of products from the recently acquired Airwave Solutions significantly contributed to the upside. Motorola’s net income for the second quarter was also higher compared to the first quarter on account of higher revenues. In addition, the company suffered net losses on the sales of investments and businesses of US$21 million in the first quarter of 2016 compared to a profit of US$1 in the second quarter. The company has partnered with Singapore Technologies Electronics to promote the development of specialized technologies for high-security, mission-critical broadband, cybersecurity solutions and purpose-built applications.7

• Strong performance in priority areas including security, data center switching and collaboration significantly impacted Cisco revenue for quarter ended July 30, 2016. Revenues increased to US$12.6 billion, reflecting a 5.3% growth quarter on quarter. On August 1, 2016, the company completed its acquisition of CloudLock, Inc., a privately-held cloud security company as a part of its cloud security strategy. With the acquisition Cisco aims to deliver a comprehensive level of visibility into user behavior and exposed sensitive data, and to provide granular controls for both cloud applications you buy (SaaS) and in-house applications (IaaS, PaaS).8 The company has also announced 5,500 lay offs starting in FY 2017 as it transitions from its hardware roots into a software-centric organization.9

7. Motorola Solutions Q1 2016 press release, May 2016, Q2 2016 press release, Aug 20168. Cisco Fourth Quarter and Fiscal Year 2016 Earnings, Aug 20169. CNBC, Aug 2016


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Q2 performanceCommunications

Company Q2’16Revenue

(US$ billions)Gross margin

(%)Net income/(loss)

(US$ millions)EPS (US$) Market cap

(US$ billions)

Cisco Systems Inc 12.6 63.1% 2,813 0.56 153.6

LM Ericsson* 6.6 32.3% 193 0.06 23.0

Motorola Solutions Inc 1.4 47.3% 107 0.61 11.0

Nokia Corp** 6.4 37.3% (751) (0.14) 32.8

* SEK to USD exchange rate used for Ericsson is 0.121658 USD/SEK.

**EUR to USD exchange rate used for Nokia is 1.12921 USD/EUR.

For additional financial information, please visit http://www.pwc.com/techscorecard and click on the “Data explorer” box.





(US$ billions)

Cisco Systems Inc 12.8 60.2% 2,319 0.45 144.6

LM Ericsson* 7.1 33.2% 248 0.07 33.9

Motorola Solutions Inc 1.3 47.4% 142 0.68 11.9

Nokia Corp** 7.0 39.2% 331 0.10 24.8

* SEK to USD exchange rate used for Ericsson is 0.118885 USD/SEK.

**EUR to USD exchange rate used for Nokia is 1.106750 USD/EUR.


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Consumer Electronics


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Market analysisConsumer Electronics• The Consumer Electronics sector revenue remained flat sequentially, but year over year it posted a

marginal decline of 2.3%. Sequentially, Canon and Philips reported growth in net income of 102% and 632%, respectively. Apple saw a decline in net income of 26% sequentially and 27% compared to Q2 2015 as iPhone sales in China lagged and tablet sales declined. Sony Corp’s net income also dipped by 70% year over year and 126% sequentially.

• Consumer confidence toward electronics spending gained marginally in June. The CTA Index of Consumer Technology Expectations (ICTE), which measures consumer expectations about technology spending, jumped 10 points in June to reach 87.5, in line with historical seasonal trends and only 0.3 points below June 2015. If tech sentiment remains, June’s rebound is a positive and points to renewed strength in the second half of the year. Additionally, as a share of total consumer spending, tech has been inching higher over the last six months, a sign that consumers are allocating an increasing share of funds towards tech. The CTA Index of Consumer Expectations (ICE), which measures consumer sentiment about the US economy as a whole, dropped nine points in June to 171.3. The drop in sentiment toward the overall economy was likely due to global uncertainty amid the Brexit vote in the United Kingdom.1

• Broader adoption of the Internet of Things (IoT) and demand for new and emerging technology is also expected to drive the US consumer technology industry to US$286.6 billion in retail revenues (US$224 billion wholesale) in 2016. Sales of burgeoning tech products, such as wearables, smart home devices and drones, will deliver an increase of 1.3% over last year’s industry revenues.2

1. Consumer Technology Association, June 2016

2. Consumer Technology Association, July 2016


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Market analysis (continued)Consumer Electronics• In company news, Apple posted second quarter revenue of US$42.4 billion and net income of

US$7.8 billion, declining from US$49.6 billion and US$10.7 billion in Q2 2015, respectively. Gross margins also dropped to 38% compared to 39.7%. in the year-ago quarter. While iPhone sales were down, the Services business grew 19% year over year and App Store revenue was the highest ever. Apple initiated a share repurchase and dividend program of US$13 billion in the second quarter. Their lower margins were due to increased costs and a negative product mix as the share of sales of iPhone declined to 57% of sales.3

• Philips reported marginal growth in revenue but reported strong net income of US$480 million, including a US$222 million award from the Funai arbitration. On May 27th, Philips also successfully spun off its lighting business—37.5 million shares were offered in the IPO at an initial trading price of €20.3

• Sony Corp’s sales decreased by 10.8% year on year to US$15.6 billion. The significant decrease was due to the impact of foreign exchange rates, a decrease in smartphone unit sales, and a decrease in revenues in the Financial Services segment due to the deterioration in investment performance in the separate account at Sony Life Insurance Co., Ltd. This decrease was partially offset by an increase in the Game & Network Services (“G&NS”) segment sales, reflecting increases in PlayStation 4 software sales. Q2 2016 net profits fell by 74% to US$205 million due to a stronger yen, earthquake damage, and a fall in mobile phone sales. Sony has also agreed to sell its battery business to the Murata Group. The transfer of Sony’s battery manufacturing operations in Japan, China and Singapore should be completed by March of next year.3

3. Seekingalpha.com


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Q2 performance Consumer ElectronicsCompany Q2’16

Revenue(US$ billions)

Grossmargin (%)

Net income /(loss)(US$ millions)

EPS(US$)

Market cap (US$ billions)

Apple Inc 42.4 38.0% 7,796 1.42 521.1Canon Inc 7.9 50.3% 492 0.48 31.2Philips* 6.5 43.3% 258 0.51 22.8Sony Corp 15.6 37.1% 205 0.16 37.0Toshiba Corporation 11.7 23.0% 775 0.18 11.4

*EUR to USD exchange rate used for Philips is 1.1136 USD/EUR.

**JPY to USD exchange rate used for Toshiba is 0.0098 USD/JPY.


Company Q2’15


Grossmargin (%)

Net income /(loss)(US$ millions)

EPS(US$)


Apple Inc 49.6 39.7% 10,677 1.85 743.5Canon Inc 8.0 51.7% 559 0.51 35.3Philips* 6.6 41.8% 303 0.33 23.6Sony Corp 14.8 37.3% 676 0.58 33.2Toshiba Corporation 11.1 24.4% (101) (0.02) 14.6

*EUR to USD exchange rate used for Philips is 1.1283 USD/EUR.

**JPY to USD exchange rate used for Toshiba is 0.0084 USD/JPY.


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EMS/Distributors


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Market analysis EMS/Distributors

• In Q2 2016, the EMS companies under study reported a year-over-year revenue decline of 1.1%. The decline was due to Ingram and Avnet. Ingram’s earnings declined because of the strengthening US Dollar and its exit from the North American mobility distribution business in Q4 2015. Avnet’s earnings declined year on year due to underperformance in the Electronics Marketing business division.

• In contrast, on a sequential basis, the EMS companies under study reported revenue growth of 5.0%. The jump was mainly due to Arrow and Ingram, which experienced quarter-over-quarter revenue increases of 9.1% and 8.4%, respectively.

• Globally, the EMS industry is turning to online resources for collecting design information and identifying suppliers, resulting in better buying decisions. In a recent survey of 3,268 electronics industry professionals, it was found that online sources are becoming a critical component of the way that supply chain professionals, engineers, designers and corporate management at original equipment manufacturers (OEMs) find the data they need. The study was conducted globally, and included Europe, Asia and the US.1

• Within the EMS industry, the market for electronics contract manufacturing (ECM) services is expected to total US$561.2 billion in 2016, up from US$515.6 billion in 2015. During 2016-2021, the market is expected to witness a compound annual growth rate (CAGR) of 8.6%, reaching US$845.8 billion by 2021.2

1. EMSNow, May 2016

2. EMSNow, April 2016


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Market analysis (continued) EMS/Distributors

• The electronics assembly services market declined 2.4% in 2015, and this has impacted the overall EMS industry. Moderate growth of 5.6% was reported in the automotive sector, while all other sectors expanded between 1.5% and 3%. Not surprisingly the computer sector declined 14.6%, reflecting the ongoing shift from laptop to mobile. The number of assemblies that are too low in volume and high in complexity to be outsourced make up a relatively large proportion of assemblies.3

• Keeping this low growth in mind, EMS companies are now looking at key strategies ahead of the next peak production season. The companies aim to increase operational performance and flexibility to meet expected growth, while streamlining operations to reduce costs and increase competiveness. The focus is on increasing automation. In recent years, automation has become more cost effective and more processes can now be automated. The business case for automation is compelling because labor is a fixed cost. Also, automated processes for assembly run faster than manual processes, bring consistency to operations and minimize performance variation.4

3. Manufacturing Market Insider, June 2016

4. Manufacturing Market Insider, May 2016


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Market analysis (continued) EMS/Distributors

• In company news, Ingram was involved in multiple acquisitions during Q2 2016. On June 14, 2016, it acquired the outstanding shares of RRC Poland Spolka Z.o.o, a Polish value-added distributor specializing in IT enterprise solutions. On May 31, 2016, it acquired the outstanding shares of Ensim Corporation, a leader in enabling the distribution of cloud applications. And on May 17, 2016, it acquired the outstanding shares of Discan Limited, a leading provider of technical services to the information technology industry in the UK and Ireland.


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Q2 performanceEMS/DistributorsCompany Q2’16


Gross margin (%)

Net income/(loss)(US$ millions)

EPS (US$) Market cap (US$ billions)

Arrow Electronics Inc 6.0 13.4% 134 1.45 7.8

Avnet Inc 6.2 11.7% 97 0.75 5.2

Flextronics International Ltd 5.9 6.9% 106 0.19 6.4

Ingram Micro 10.1 7.1% 55 0.36 5.2

Foxconn 28.1 6.0% 551 0.03 43.3





(US$ billions)

Arrow Electronics Inc 5.8 13.2% 124 1.28 7.2

Avnet Inc 6.8 11.6% 159 1.15 5.7

Flextronics International Ltd 5.6 6.3% 111 0.19 6.7

Ingram Micro 10.6 6.2% (34) (0.22) 3.9

Foxconn* 31.5 7.2% 855 0.05 54.6

* TWD to USD exchange rate used for Foxconn is 0.0324 USD/TWD.



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Snapshot by subsectorInternet


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Market analysisInternet

• The Internet sector posted a strong second quarter, with an increase in average revenue of 22% year on year and 9% sequentially. Average net income was also strong, with five out of the seven companies under coverage reporting positive net income. In terms of profit growth, Amazon led the way with a year-over-year increase of 831%, followed by eBay which reported a growth of 424%. Netflix and Google also reported positive year-on-year net income growth of 55% and 24%, respectively.

• Advertising continues as a major revenue stream for many of these companies. While total Internet advertising revenue will surge at an 11.1% CAGR to reach US$260.4bn by 2020, it is not expected to reach its full potential as consumers still turn to ad-blocking to overcome delays in programs and loading times. Programmatic advertising has grown rapidly, with more than half of digital ads in mature markets now traded automatically—opening the way to better targeting of premium ads. While mobile is expected to grow at a CAGR of 19.6% to US$84.8bn in 2020, reflecting the ongoing growth in both smartphone usage and access to Internet through smartphones, mobile’s share of total global Internet advertising is expected to remain even at 32.6% in 2020. Until the measurement and user experience of mobile ads improve, advertisers will stick with traditional media and other forms of Internet advertising, notably search.1

1. PwC’s Entertainment & Media Outlook, http://www.pwc.com/gx/en/industries/entertainment-media/outlook/segment-insights/internet-advertising.html


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Market analysis (continued)Internet

• E-commerce is one of the leading pillars of the Internet industry and is expected to see continued growth over the next three years. The ranking of the top five Internet retailers globally includes two companies based in the US, two from China and one from Europe. Pure online retail sales figures show the dominance of Amazon.com with an 8% share of the global market. Product revenues of the US-based company in 2015, at nearly US$80 billion, were three times higher than those of the second ranking online retailer, China's JD.com. Online marketplaces, represented by global companies such as Rakuten, eBay, and Alibaba, were also attracting online shoppers. Online consumers are seen to be more likely to purchase from a marketplace than a retailer website. Local and regional players also are expanding in many areas to challenge the global leaders. For example, Souq.com, a regional leader in the Middle East and India’s Flipkart and Snapdeal, are all rivals to Amazon. 2

• US retail e-commerce sales for the second quarter of 2016, were US$97.3 billion, an increase of 4.5% from the first quarter of 2016. Total retail sales for the second quarter of 2016 were estimated at US$1,201.9 billion, an increase of 1.5% from the first quarter of 2016. The second quarter 2016 e-commerce estimate increased 15.8% from the second quarter of 2015, while total retail sales increased 2.3%. This indicates the trend of online retail growing faster than offline retail. E-commerce sales in the second quarter of 2016 accounted for 8.1% of total sales.3

2. www.businesswire.com, July 20163. https://www.census.gov/retail/mrts/www/data/pdf/

ec_current.pdf


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• In company news, Amazon reported an increase in sales of 31% year over year, and EPS came in at US$1.78. The growth in EPS was due to improved performance and productivity across Amazon's business lines in contrast to the share buybacks that had been the case in prior quarters. Recent investments are starting to pay off in the form of higher margins as the firm continues to leverage greater volumes across its fixed cost base. The operating margin was 4.2%, compared to 2% last year, driven by a 200 basis point increase in gross margin. Amazon's recent investments in fulfillment infrastructure, technology and content, as well as Amazon Web Services (AWS) are paying off, and have allowed the company to take part in multiple categories and expand margins through positive operating leverage. AWS was the main driver of growth. Revenue increased 58% as Amazon was able to increase its share of the public cloud by lowering prices, and, due to greater scale and cost structure, its productivity. With its higher margin, AWS's growing portion of the total sales mix was a key factor behind the improved profitability.4

• Verizon Communications Inc. has agreed to pay US$4.8 billion to acquire Yahoo Inc., ending a drawn-outauction process for the Internet company. The price tag, which includes Yahoo’s core Internet business andsome real estate, is a remarkable fall for the Silicon Valley web pioneer that once had a market capitalizationof more than US$125 billion at the height of the dot-com boom. For Verizon, the deal simply adds anotherpiece to the digital media and advertising business it is building.5

4. Seekingalpha.com Aug 20165. wsj.com, July 2016


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• Netflix’ Q2 2016 revenues increased by US$460.5 million over Q2 2015 due to growth in global streaming paying memberships, primarily internationally, reflecting Netflix’s focus on becoming a global Internet TV network. The average monthly revenue per paying streaming membership increased as a result of increases related to price changes and plan mix. The decrease in operating income in Q2 2016 compared to last year was due to increased content expense as Netflix continues to acquire, license and produce content, including more Netflix originals, and to increased headcount costs to support international expansion.

• Microsoft Corp. and LinkedIn Corporation have entered into a definitive agreement under which Microsoft will acquire LinkedIn for US$196 per share in an all-cash transaction valued at US$26.2 billion, inclusive of LinkedIn’s net cash. Jeff Weiner will remain CEO of LinkedIn, reporting to Satya Nadella, CEO of Microsoft. The transaction is expected to close by the end of this calendar year. Over the past year, the company launched a new version of its mobile app that has led to increased member engagement; enhanced the LinkedIn newsfeed to deliver better business insights; acquired an online learning platform called Lynda.com; and rolled out a new version of its Recruiter product to its enterprise customers. Microsoft expects the acquisition to have minimal dilution of ~1% to non-GAAP earnings per share for the remainder of fiscal year 2017 post-closing and for fiscal year 2018 based on the expected close date, and become accretive to Microsoft’s non-GAAP earnings per share in Microsoft’s fiscal year 2019.6

6. microsoft.com, June 2016


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Q2 performance Internet


(US$ billions)Gross

margin (%)Net income


(US$ billions)

Amazon 30.4 36.9% 857 1.78 339.2

eBay 2.2 77.9% 435 0.38 26.5

Google 21.5 62.2% 4,877 7.00 483.2

LinkedIn .93 87.1% (119) (0.89) 22.6

Netflix 2.1 30.0% 41 0.09 39.2

Yahoo! 1.3 43.8% (440) (0.46) 35.6

Yelp .17 91.3% 0 0.01 2.1



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Q2 performance (continued) Internet

Companyb Q2’15Revenue

(US$ billions)Gross



(US$ billions)

Amazon 23.2 34.6% 92 0.19 203.2

eBay 4.4 69.2% 682 0.56 73.5

Google 17.7 62.9% 3,931 4.96 368.8

LinkedIn .71 85.9% (67.50) (0.53) 23.7

Netflix 1.7 32.6% 26.34 0.06 39.8

Yahoo! 1.2 60.1% (19.19) (0.02) 37.0

Yelp .13 90.3% (1.31) (0.02) 2.8



31

Snapshot by subsectorSemiconductors


32

Market analysisSemiconductors

• The Semiconductors subsector reported year-over-year revenue growth of 4.7% and sequential revenue growth of 8.6% in Q2 2016. Growth was led by Applied Materials, which reported revenue growth of 13% year over year and 15% quarter over quarter. Out of the five companies tracked, Intel was the only company to report a sequential decline, a marginal 1%.

• Global silicon wafer area shipments in Q2 2016 increased 7% quarter over quarter, reaching 2,706 million square inches from 2,538 million square inches in Q1 2015. Year over year, Q2 2016 shipments were flat compared to the 2,702 million square inches in Q2 2015. Overall, Q2 2016 shipments are at their highest recorded quarterly level.1

• In line with the upbeat silicon wafer market, global semiconductor capital spending is projected to decline just 0.7% in 2016 as opposed to a previous forecast of a 2% drop. Macroeconomic instability, excess inventories and weak demand have driven semiconductor device manufacturers to cut production volumes. However, improved demand in Q2 2016 is expected to slow the decline in the market.2 The big three chipmakers—Intel, Samsung and TSMC—are likely to spend US$20 billion towards capital expenditures, representing a 90% increase from Q1 2016.3

• Despite the positive cues, the Semiconductors subsector continues to face stiff challenges. The impact of Brexit is yet to be seen, which may cause semiconductor inventory levels to rise in the third and fourth quarters.2 Also, according to some estimates, worldwide semiconductor revenue is likely to fall 2.3% to US$324 billion, affected by an economic pause in China and emerging markets and a softening of the overall outlook in the US.4

1. Semi.org, July 20162. Gartner.com, July 20163. EETimes.com, August 20164. IDC.com, May 2016


33

Market analysis (continued) Semiconductors

• In company news, Applied Materials, Inc reported net sales of US$2.8 billion in Q2 2016, up 15% sequentially and 13% year over year. New orders were US$3.7 billion, up 6% sequentially and 26% year over year. The backlog of US$5.0 billion was up 19% sequentially and 60% year over year. The company recorded a gross margin of 42%, an operating margin of 21%, and net income of US$505 million or US$0.46 per diluted share. Applied Materials generated US$981 million in cash from operations, paid dividends of US$108 million and used US$196 million to repurchase 9 million shares of common stock at an average price of US$21.88.

• Effective Q2 2016, Applied Materials has expanded its Display segment to include roll-to-roll web coating systems (previously in Energy and Environmental Solutions) and display upgrade equipment (previously in Applied Global Services). The Display segment is now named Display and Adjacent Markets. The company no longer reports Energy and Environmental Solutions as a segment and its solar business is now included in Corporate and Other. The Silicon Systems segment is now named Semiconductor Systems. Applied Global Services continues to include 200-millimeter semiconductor equipment sales.


34

Q2 performance Semiconductors

Company Q2’16


Grossmargin (%)


EPS(US$)


Intel 13.5 58.9% 1,330 0.27 154.6

Applied Materials 2.8 42.3% 505 0.46 28.7

Texas Instruments 3.3 61.2% 779 0.76 109.1

TSMC 6.8 51.5% 2,237 0.43 136.0

Qualcomm Inc 6.0 58.1% 1,444 0.97 76.8

Company Q2’15


Grossmargin (%)


EPS(US$)


Intel 13.2 62.5% 2,706 0.55 147.4

Applied Materials 2.5 40.9% 329 0.27 21.4

Texas Instruments 3.2 58.2% 696 0.65 89.7

TSMC 6.7 48.5% 2,575 0.50 117.8

Qualcomm Inc 5.8 58.0% 1,184 0.73 107.9



35

Snapshot by subsectorSoftware


36

Market analysis Software• The Software sector had mixed results in terms of year over year and quarter over quarter in Q2

2016. Year over year it grew by 5%, but sequentially it declined (4.1%). In terms of net income it was a really poor quarter, with sharp declines in net income year on year for Intuit and Symantec. VMware and SAP were the bright spots, with 54.1% and 75.2% increases in profits year on year and 64.6% and 44% sequentially, respectively.

• Despite poor company performance, worldwide spending on information security products and services is expected to reach US$81.6 billion in 2016, an increase of 7.9% over 2015. Consulting and IT outsourcing are currently the largest categories of spending on information security. Until the end of 2020, the highest growth is expected to come from security testing, IT outsourcing and data loss prevention (DLP). Preventive security is also expected continue to show strong growth, as many security practitioners continue to have a buying preference for preventive measures. However, solutions such as security information and event management (SIEM) and secure web gateways (SWGs) are evolving to support detection-and-response approaches.1

• The average selling price for firewalls is expected to increase by at least 2% or 3 % percent year over year until the end of 2018. This is driven by the market benefiting from higher demand for high-end equipment among cloud and other service providers, due to larger bandwidth needs and an increasing number of devices. While vendor competition continues to put pressure on pricing, enterprises, service providers and web-scale organizations are moving toward deploying bigger and more expensive firewalls. As a result, the deployment of large firewalls by cloud service providers will remain an important source of revenue growth for vendors. By 2018, 90% of organizations will implement at least one form of integrated DLP, up from 50% presently.1

1. Gartner.com, Aug 2016


37

Market analysis (continued) Software

• While global software spending is forecasted to hit US$332 billion in 2016, many organizations can cut spending on software by as much as 30% by implementing three software license optimization best practices. The keys to reducing software license spending are application configuration optimization, recycling software licenses and by using software asset management (SAM) tools. Achieving software savings is a complex exercise, but the potential savings are too large to ignore.2

• Automated software license optimization is a relatively new discipline and most organizations are at lower levels of maturity. The variety of license entitlements also makes it tough for IT leaders to spot savings, especially in environments with many software publishers and titles. But it's worth pursuing, as spending reductions contribute directly to the bottom line. Organizations with mature software license optimization processes that were automated using SAM tools reported reducing software expenses, on average, by 30%.2

• It is expected that more than US$1 trillion in IT spending will be directly or indirectly affected by the shift to cloud during the next five years. This will make cloud computing one of the most disruptive forces of IT spending since the early days of the digital age. The market for cloud services has grown to such an extent that it is now a notable percentage of total IT spending, helping to create a new generation of start-ups and "born in the cloud" providers. The average amount of cloud shift in 2016 is expected to reach US$111 billion, increasing to US$216 billion by 2020.3

2. Gartner.com, July 20163. Gartner.com, July 2016


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Market analysis (continued) Software• In company news, Adobe Systems has gained momentum led by strong demand for digital

experience solutions. Such demand drove revenue growth of 20% in Q2 2016 and resulted in quarterly revenue of US$1.4 billion. Strong adoption rates in Creative Cloud and Document Cloud helped push digital media annualized recurring revenue to US$3.41 billion at the end of the quarter. Operating income leapt 78% in the quarter on a year-over-year basis. More than 80% of Adobe's second-quarter revenue was of the recurring variety, which gives the firm considerable visibility into its future operations. Adobe's asset-light business model enables it to generate huge free cash flow. Adobe also has expansion opportunities by upselling of current customers. 4

• Capitalizing on another major trend, SAP has been already using IoT-based systems, and it is increasingly focused on the Internet of Things (IoT). It is working on various offerings to support customers already using IoT-based systems and also working on a future wave of SAP IoT implementations. It is currently seeing three key uses for the technology: (1) For the industrial customers using heavy equipment and aiming to optimize operations cost, maintenance cost and turnaround time; (2) For the aftermarket, which includes end-consumer and other businesses which have traded a product and are getting feedback to improve design, marketing and create better engagement with customers; and finally, (3) For customers with large moving assets such as fleets, cars, trucks, who are using the service to track and trace on a real-time basis. These comprise the three segments which SAP plans to target to get its next leap in revenue.4

4. Seekingalpha.com, July 2016


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Q2 performance Software


(US$ billions)Gross

margin (%)Net income/(loss)

(US$ millions)EPS

(US$)Market cap

(US$ billions)

Adobe 1.4 85.6% 244 0.48 49.2

Intuit 0.7 78.0% (40) (0.16) 28.4

Microsoft 20.6 61.3% 3,122 0.39 399.5

Oracle 10.6 81.7% 2,814 0.66 165.6

SAP* 5.8 70.4% 909 0.76 90.0

Symantec 0.9 83.1% 66 0.11 12.6

VMware 1.7 84.6% 265 0.62 7.0*Euro to USD exchange rate used for SAP is 1.1136 USD/Euro.

For additional financial information, please visit http://www.pwc.com/techscorecard and click on the “data explorer” box.


40

Q2 performance (continued)Software


(US$ billions)Gross

margin (%)Net income/(loss)

(US$ millions)EPS

(US$)Market cap

(US$ billions)

Adobe 1.2 84.1% 147.49 0.29 39.3

Intuit 0.7 75.9% 14.00 0.05 29.2

Microsoft 22.2 66.3% (3,195.00) (0.40) 354.4

Oracle 10.7 80.8% 2,758.00 0.62 189.6

SAP* 5.5 67.7% 518.62 0.43 93.2

Symantec 0.9 72.2% 117.00 0.17 15.7

VMware 1.5 83.6% 172.00 0.40 10.5*Euro to USD exchange rate used for SAP is 1.3255 USD/Euro.



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Snapshot by subsectorSoftware Services


42

• The Software Services sector performed well with respect to revenue growth, posting year-on-year average revenue growth of 9.0% and sequential growth of 5.0%. In contrast, profitability was far off the mark, with an average decline of 26% year on year and 25% sequentially. Computer Science Corp and Cognizant Technologies led the profitability decline, off 113% and 40%, respectively. The decline in net income for Computer Science Corp was due to US$57 million of restructuring and US$70 million of transaction and integration-related costs.

• The Software Services market is rapidly changing. In recent years, there has been fast growth of the as-a-service market which has negatively impacted service providers. The overall market is now expanding to include Infrastructure-as-a-Service (IaaS) and Software-as-a-Service (SaaS) segments, in addition to traditional outsourcing, which continues to lose share to cloud-based infrastructure and software platforms. The as-a-service market, which includes IaaS and SaaS activity, represents more than one-third of the combined global market for sourcing services. As more and more work is automated and moved to the cloud, traditional outsourcing activity will decline.1

• According to the ISG Outsourcing IndexTM, which measures commercial outsourcing contracts with annual contract value (ACV) of US$5 million or more, ACV for the combined global market—representing both traditional and as-a-service sourcing activity—was US$7.9 billion in Q2 2016, down 2% from the prior year. Traditional sourcing was down 17%, to US$5.1 billion, while as-a-service sourcing climbed 45%, to US$2.8 billion. The decline in traditional outsourcing is due to the sluggishness in new scope contract awards, particularly in the information technology outsourcing (ITO) space, which saw its ACV decline 24% from the prior year. As-a-service growth, meanwhile, was driven by a 70% increase in IaaS ACV.1

Market analysisSoftware Services

1. The Global ISG (Information Services Group) Outsourcing IndexTM, July 2016


43

• Regionally, the Americas saw its combined Q2 2016 ACV grow by 7%, to US$4.2 billion, pushed by surging as-a-service market that generated US$1.8 billion in ACV, up 49% over the prior year. The traditional sourcing market recorded its tenth consecutive quarter of ACV in excess of US$2 billion and outpaced the quarterly ACV of the Europe, Middle East and Africa (EMEA) market for the first time since Q1 2013. The Europe, Middle East and Africa (EMEA) market, far less reliant than the Americas on as-a-service activity, saw its combined second-quarter ACV drop 18%, to US$2.7 billion. Traditional sourcing, at US$2.0 billion, was down 28%, while the as-a-service market, at US$654 million, was up 38%.1

• Q2 2016 ACV in the combined Asia Pacific market rose 13%, to US$989 million, with the as-a-service market growing 42% even as the traditional sourcing market remained relatively flat (in a range between US$500 million and US$600 million) for the sixth straight quarter.1

• As-a-service growth will remain the driving force for the time to come. At the half-year mark, 36% of the combined market is accounted for by as-a-service ACV. Traditional sourcing had a slow start in Q2 2016.1

Market analysis (continued)Software Services

1. The Global ISG (Information Services Group) Outsourcing IndexTM, July 2016


44

• In company news, Cognizant Technologies reported a revenue for Q2 2016 of US$3.37 billion, up 9.2% from US$3.09 billion in the second quarter of 2015. But net income was US$252.4 million, a 40% decline compared to US$420.1 million, in Q2 2015 and a 43% decline sequentially from US$441 million. This was due to the principal operating subsidiary in India, which repurchased shares from its shareholders, which are non-Indian Cognizant entities in May 2016. This resulted in a one-time remittance of US$2.8 billion of cash from India. US$1.2 billion, or US$1.0 billion net of taxes, was transferred to the US, with the other US$1.6 billion remaining overseas. As a result of this transaction, the parent company incurred an incremental 2016 income tax expense of US$237.5 million, of which US$190.0 million was recognized in the quarter ended June 30, 2016 and approximately US$23.7 million will be recognized in each of the quarters ending September 30, 2016 and December 31, 2016.

• CSC has announced that it has unanimously approved a plan to merge the company with the Enterprise Services segment of Hewlett Packard Enterprise (HPE). The new company is expected to have annual revenues of US$26 billion. The merger is expected to be completed by the end of March 2017. Following the transaction, CSC and HPE shareholders each will own approximately 50 percent of the new company’s shares. The merging of these businesses will offer additional strength in customer service and IT operations; experience and IP in areas such as financial services, healthcare and life sciences, transportation, consumer products, and insurance; 85 delivery centers and 95 data centers across 70 countries; capabilities in next-generation cloud, security, application development and modernization, big data and analytics, mobility, workplace, and advanced business process and IT services.

Market analysis (continued)Software Services


45

Q2 performanceSoftware Services


(US$ billions)Gross



(US$ billions)

Cognizant 3.4 39.6% 252 0.41 34.7

CSC 1.9 26.4% (21) (0.15) 6.9

Infosys 2.5 36.4% 511 0.22 40.8

HCL 1.7 34.4% 305 0.22 15.4

TCS 4.4 42.7% 940 0.48 75.0


(US$ billions)Gross



(US$ billions)

Cognizant 3.1 40.2% 420 0.68 37.2

CSC 2.8 26.6% 160 1.14 9.8

Infosys 2.3 36.4% 476 0.21 36.2

HCL 1.5 34.1% 279 0.79 20.4

TCS 4.0 43.6% 898 0.46 79.1



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Systems and PC Hardware


47

Market analysisSystems and PC Hardware

• A look at the companies studied indicates the second quarter of 2016 posted mixed performance, with revenue increasing by 6.7% quarter on quarter, but declining by 3.4% year on year. However, net income was a different story, increasing 249% year on year and 104% quarter on quarter. The increase was attributable to strong results reported by Xerox, EMC and Lenovo. Despite the increase in net income, overall performance was relatively weak in terms of demand.

• Worldwide PC shipments totaled 64.3 million units in the second quarter of 2016, a 5.2% decline from the year earlier. One of the persisting problems in the PC market has been the price hike in selected regions due to weakening local currency against the US dollar. This price issue has impacted both the EMEA and Latin America regions for the past year. However, PC shipment declines became moderate in the second quarter compared with previous quarters.1

• The Western European printer and multifunction (MFP) market also saw a decline, falling by 5.8% in unit terms in Q2 2016 compared with the same period a year ago. Both the inkjet and laser segments turned in negative performances. For the second consecutive quarter, the market showed a decline of 275,000 units with a shipment volume of 4.5 million devices—a decline that is again largely due to the contraction in consumer printing.2

1. Gartner, July 2016

2. IDC, Aug 2016


48

Market analysis (continued)Systems and PC Hardware

• Looking at specific company performance, Lenovo and HP Inc remained the top performers in the segment for the quarter. Lenovo maintained the top position in worldwide PC shipments in the second quarter of 2016, despite a 2.2% decline in units from the same period last year. The company experienced double-digit growth in the US mobile PC market, but EMEA continued to be a challenge due to inventory build up during the quarter. In Asia/Pacific, Lenovo's shipments declined, but the decline was less than the overall average in the region. HP Inc returned to positive growth in the second quarter of 2016 after four consecutive quarters of shipment declines having resolved its inventory buildup, which had slowed its sell-in shipments. It also did well in EMEA, maintaining the top position, but was not able to surpass Dell in the US.1

• Xerox’s second quarter 2016 total revenues decreased by 4% to US$4.4 billion as compared to second quarter 2015, with minimal overall negative impact from currency. The company’s year on year net income for the quarter increased exponentially which was due to a decrease in costs and other operating expenses. Selling, General & Administrative expenses of US$862 million was US$44 million lower than Q2 2015.

1. Gartner, July 2016


49


• Xerox’s Q2 2016 restructuring costs decreased by 55% to US$71 million. The higher costs in Q2 2015 were primarily due to US$146 million associated with software asset impairments resulting from a change in the company’s Government Healthcare Solutions strategy in the Services Segment. Loss from discontinued operations (net of tax) of US$95 million was another factor which affected the net profit for the second quarter of 2015.3 A decrease in other costs, including cost of outsourcing, maintenance and rentals, cost of sales and R&D, positively impacted the net income for Q2 2016. The quarter on quarter net income increased significantly, by 356%, due to a decrease in restructuring and related costs of 43.7% and income tax expenses of US$15 million in the first quarter compared to a benefit of US$9 million in the second quarter of 2016. The company plans to separate into two independent, publicly traded companies by year-end.4

• EMC’s quarter on quarter revenue increased modestly by 10%, however the net income for the company grew by 117% to US$581 million. The surge was attributable to an increase in product revenues of 18% and an increase in investment income of US$13 million. A credit of US$1 million in restructuring and acquisition-related charges in the second quarter compared to the US$49 million cost in the first quarter further led to a rise in the profitability. The restructuring and acquisition-related charges in the first quarter were attributable to VMware’s restructuring charges.5

3. Loss from discontinued operations includes sale of the Information Technology Outsourcing business

4. Xerox Second Quarter 2016 Earnings, July 2016

5. EMC Corp 10K filing, July 2016


50


• Despite a profit upswing of 69% year on year, the 6.2% decline in sales has caused Lenovo to design a new strategy with focus on high-growth markets for PCs, moving toward higher-priced smartphones and a hyper-converged infrastructure.6 Contributing to the increase in the company’s net income was a 17% year on year decline in operating expenses and an expense-to-revenue ratio of 12.8%. The decline in the expense-to-revenue ratio was mainly attributable to the business realignment actions that led to lower expenses. Also, the net other operating income for the period was US$113.9 million compared to a loss of US$31 million in Q2 2015. The net other operating income for the period was mainly attributable to research and development related government grants and other incentives.7

6. CRN, Aug 2016

7. Lenovo FY2016/17 First Quarter Results Announcement, Aug 2016


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Q2 performance Systems and PC HardwareCompany Q2’16


Grossmargin (%)

Net income/(loss) (US$ millions)

EPS (US$) Market cap (US$ billions)

EMC 6.0 62.1% 581 0.29 53.3

HP Inc 11.9 18.3% 783 0.45 23.9

IBM 20.2 47.9% 2,504 2.61 145.1

Lenovo 10.1 15.2% 173 1.56 134.2

Xerox 4.4 31.2% 155 0.15 9.6

For additional financial information, please visit http://www.pwc.com/techscorecard and click on the “Data explorer” box.Dell privatization completed on Oct 29, 2013

Company Q2’15

Revenue($ billions)

Grossmargin (%)

Net income/(loss) ($ millions)

EPS (US$) Market cap ($ billions)

EMC 6.0 59.8% 487 0.25 52.4

HP Inc 12.4 18.8% 854 0.47 55.2

IBM 20.8 49.9% 3,449 3.50 159.3

Lenovo 10.7 15.4% 102 0.94 -

Xerox 4.6 31.1% 12 0.01 11.4


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Methodology

We analyzed a selection of the largest technology companies included in the S&P 500 index as well as a selection of large international technology companies that regularly report financial results.

In order to present the information by calendar year or calendar quarter, the financial information for companies with non-calendar years or quarters was included in the nearest calendar year or quarter.

We analyzed technology companies that operate predominantly within the following sectors:

• Communications

• Consumer Electronics

• EMS/Distributors

• Internet

• Semiconductors

• Software

• Software Services

• Systems and PC Hardware


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Technology industry leadersRaman ChitkaraGlobal Technology LeaderPhone: +1 408 817 3746Email: [email protected]

Rod Dring – Australia Werner Ballhaus – Germany Yury Pukha – RussiaPhone: +61 2 8266 7865Email: [email protected]

Phone: +49 211 981 5848Email: [email protected]


Estela Vieira – Brazil Sandeep Ladda – India Mark Jansen – SingaporePhone: +55 1 3674 3802Email: [email protected]

Phone: 91 22 6689 1444Email: [email protected]

Phone: +65 6236 7388Email: [email protected]

Christopher Dulny– Canada Masahiro Ozaki– Japan Philip Shepherd ― UAEPhone: +416 869 2355Email: [email protected]


Phone: +97 1 43043501Email: [email protected]

Jianbin Gao – China & Hong Kong Hoonsoo Yoon – Korea Jass Sarai – UKPhone: +86 21 2323 3362Email: [email protected]


Phone: +44 0 1895 52 2206Email: [email protected]

Pierre Marty – France Ilja Linnemeijer – The Netherlands Pierre-Alain Sur – USPhone: +33 1 5657 5815Email: [email protected]



We exercised reasonable professional care and diligence in the collection, processing and reporting of this information. However, the data used is from third-party sources and PricewaterhouseCoopers has not independently verified, validated or audited the data. PricewaterhouseCoopers makes no representations or warranties with respect to the accuracy of the information, nor whether it is suitable for the purposes to which it is put by users.

PricewaterhouseCoopers shall not be liable to any user of this report or to any other person or entity for any inaccuracy of this information or any errors or omissions in its content, regardless of the cause of such inaccuracy, error or omission.

Furthermore, in no event shall PricewaterhouseCoopers be liable for consequential, incidental or punitive damages to any person or entity for any matter relating to this information.

© 2016 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

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