The Canadian Industrial Outlook sets the stage for the Canadian economy by examining 10 key industries.
Document Highlights
Profits and margins for Canada’s information technology and communications industry continue to rise from the lows they reached during the tech bust in 2001. With revenue growth expected to outstrip costs this year, profits will rise by 29 per cent to $3.9 billion, reaching a five-year high.
Profits will rise by a further 10 per cent next year, but this will mark a cyclical peak for the industry’s profit margin, as it reaches 4 per cent. The industry’s profit margin will then deteriorate somewhat, averaging 3.5 per cent between 2007 and 2009.
Although price growth will accelerate somewhat, advances in technology will prevent dramatic improvement. Competing technologies such as voice over Internet protocol (VoIP) and phone service provided by cable operators will limit the pricing power for telecom service providers. Meanwhile, steady improvements in the functions and features provided by equipment manufacturers with no corresponding increase in nominal prices will reduce their effective prices.
The outlook includes special features on Canada’s position in the global supply chain for information technology and communications and on the regulation of the telecommunications industry.
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