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By | Kat Hall 27th January 2015 15:42

PwC: Forget margin, tech biz, HUSTLE for that SALE

Also, you could be sold for parts. Sorry.

The phrase "turnover is vanity, profit is sanity" apparently does not apply to the tech sector, with PwC advising companies this year to focus on revenue growth above margins and "yield maximum shareholder value".

According to the report 2015 Technology Industry Trends this is particularly important in a "volatile market", which is set to see more HP-style "conscious uncouplings".

In November, HP announced that it was splitting in two, separating its computer and printer hardware business.

Last year eBay’s 20-year-old online auction business was separated from PayPal. Meanwhile IBM has invested billions of dollars by making dozens of purchases, especially in the cloud computing and big data sectors. By doing this, the company hopes to boost its sluggish revenue growth.

"These are just early examples of the kinds of ongoing corporate re-evaluations that we believe many technology companies will undertake during the next few quarters," it said.

According to the research "in the tech industry, in almost all situations, widening revenue streams is the only viable option for long-term survival."

It said: "In fact, companies that look inward toward margin improvements can maintain that strategy for only a short time before shareholders will lose their patience and the company will lose its support in the marketplace."

According to analyst firm Canalys, the recent reduction in oil prices will act as a "short-term economic stimulus". It will boost corporate profits and consumer disposable incomes, which will filter into IT spending, it said.

The company is forecasting an increase across all areas of tech with smart phone sales up 16 per cent, PCs up four per cent, enterprise networking up five per cent, IT security up seven per cent, x86 servers up per cent and unified communications up four per cent. ®

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