Roger Cheng Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--
IBM, based in Armonk, N.Y., has stated an intent to be more acquisitive, having spent nearly the same amount on deals in the first quarter as it did last year. The company said it would spend $20 billion on acquisitions by 2015, underscoring the need to compete against other tech giants, which have been eager to scoop up businesses to widen their own product offerings and reach. IBM has more recently pushed into the software business, which has been the most profitable and fastest growing segment.
The Sterling deal ranks among the highest in recent years. IBM previously spent $922.5 million on SPSS Inc. last year, and $4.71 billion on Cognos at the end of 2007. Sterling gives IBM a presence in the business-to-business market with business integration services, supply chain software and other customer service products, as well as 18,000 clients from a wide swath of different industries.
The transformation is seen as necessary as IBM competes with other tech heavyweights, including
Craig Hayman, general manager of IBM's WebSphere business, said the "acquisition will give IBM new tools to help clients build dynamic business networks that connect" software across different servers. "In addition, the fact that much of this can be done in the cloud will make it compelling to large numbers of our customers." Cloud computing is a fast-growing segment of the software industry in which applications can be accessed online as opposed to company-specific systems.
Sterling has about 2,500 employees will be integrated into IBM's WebSphere unit. The purchase is set to close in the second half of the year.
The push to software followed IBM's move into consulting and away from the hardware businesses. The company dumped its personal computer business in 2004 to Lenovo Group Ltd. (0992.HK, LNVGY).
IBM shares rose slightly to $125.44 in early trading, while
-By Roger Cheng, Dow Jones Newswires; 212-416-2153; firstname.lastname@example.org
(Tess Stynes contributed to this report.)