IBM Signals a New Round of Acquisitions

Published on October 4, 2011
by Arik Hesseldahl

Computing giant IBM is just signaled that its about to go shopping. In an interview with Bloomberg, Steve Mills, Senior Vice President and Group Executive, Software and Systems, who you may remember from from this interview with AllThingsD in May, says Big Blue is looking for software companies in the $100 million to $300 million range.

The thing is, IBM is been acquiring mid-sized companies at a pretty steady clip. The biggest deal IBM has done in recent memory is the $1.7 billion acquisition last summer of Netezza. Then for dessert it nabbed Blade Systems the following month for an undisclosed amount. Since then it has done five deals, the largest and most recent of which was the $387 million acquisition of Algorithmics, a Canadian risk analytics firm.

All told, IBM bought 15 companies in 2010, but has bought only three so far this year. It has bought 50 since 2006, suggesting it could easily step up its deal-making pace before the end of the year. And with nearly $12 billion in cash on the balance sheet it could do so without breaking much of a sweat.

But as Mills told Bloomberg, there’s always got to be a good reason to buy a company. “Everything‚Äôs got to fit … No spurious, off-to-the-side, unrelated things.” Somehow I can’t help but think that’s a slap at Hewlett-Packard, whose acquisitions of late, have been, well, a tad controversial. But public slap fights aren’t IBM’s style, so maybe I’m reading too much into it.

IBM has a big goal to meet, and it can’t get there without making acquisitions: It wants to add another $20 billion in annual revenue by 2015. It recently hit a significant milepost along the way: Its market capitalization eclipsed that of Microsoft last week. As of yesterday, IBM was worth $207 billion to Microsoft’s $205.5 billion.

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