International Business Machines Corp. (
recently announced its plans to acquire Austin-based information
management, compliance and electronic discovery software
developer StoredIQ. However, IBM did not disclose the financial
terms of the transaction. The acquisition is expected to close in
the first quarter (January-March) of 2013.
Founded in 2001 as Deepfile Corp, StoredIQ changed its name in
2005. As per U.S. Securities and Exchange Commission (SEC)
filings, the company received $11.4 million in funding from 12
investors in August 2012. StoredIQ has a strong clientele of 120
and has been named as one of the four 2012 Cool Vendors in risk
management, privacy and compliance by market research firm
Enterprises are always on the lookout for efficient ways to
manage the vast amount of data that is generated during a
business process. As per IBM estimates, 2.5 quintillion bytes of
data are created every day from a variety of sources around the
world, making it difficult for enterprises to analyze the data
and navigate through it, which therefore impacts their
competitiveness, efficiency and profitability.
StoredIQ develops software that helps in managing big data and
serves a number of industries including healthcare. In contrast
to some of its peers' data management approach, StoredIQ software
manages the data at the very place it was originally stored
rather than moving it to another storage location. This saves a
lot of secondary storage cost and mitigates the risk of data
Data retention has become very important for enterprises due
to increasing regulations and compliance requirements. Apart from
legal needs, old data also helps companies to understand business
trends, seasonal requirements and demand patterns. StoredIQ
software analyzes data, identifies the important ones for storage
purpose and deletes the rest.
This again not only saves storage cost but also helps
enterprises to quickly access important information from a heap
of data within a very short span of time. Moreover, compared to
most software, StoredIQ is much easier to install.
IBM intends to integrate StoredIQ in its software business as
a part of its Information Lifecycle Governance suite, which
comprises PSS Systems (2010) and Vivisimo (May 2012). The current
acquisition complements these earlier acquisitions by expanding
IBM's product offering in the big data management market, with
keen focus on the legal and regulatory sector.
Big Data management provides significant growth opportunity
over the long term. According to market research firm IDC, the
Big Data market is expected to reach $16.5 billion by 2015,
growing 40% annually from $3.2 billion in 2010. We believe that
the StoredIQ acquisition places IBM in a stronger position to
capitalize on this opportunity going forward.
We expect IBM to continue to pursue strategic acquisitions (10
acquisitions year-to-date at an aggregate cost of $2.61 billion)
that can be easily integrated into its current business, thereby
expanding its product portfolio in higher-growth segments, such
as smarter commerce, business analytics and security. The
acquisitions are also increasing its global scale. IBM plans to
spend approximately $20.0 billion on acquisitions over the next
five years, which are expected to contribute 90 cents in earnings
per share each year.
However, significant competition from other vendors such as
EMC Corp. (
Oracle Corp. (
SAP AG (
and sluggish enterprise spending keeps us on the sidelines. Thus,
we maintain our Neutral recommendation over the long term.
Currently, IBM has a Zacks #3 Rank (Hold).
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