Acquisitions continue to be a key growth strategy for
International Business Machines
The company recently announced the acquisition of Israeli cyber
security solutions provider Trusteer. IBM is expected to shell
out something in the range of $700.0 million to $1.0 billion for
the privately-held company.
Trusteer helps organizations to fight off financial frauds and
other cyber attacks. The takeover is expected to strengthen the
technical capability of IBM's security lab, which is mainly
focused on developing solutions that enhances mobile and
application security, helps in effectively countering fraud and
IBM has been trying hard to strengthen its presence in this
segment and has signed dozens of deals in this sector over the
last few years. The latest addition was Q1 Labs in late 2011,
which helped IBM to form a new security systems division. We
believe that the addition of Trusteer will expand IBM security
portfolio and market share, going forward.
Trusteer's cloud-base solutions will primarily help IBM to
improve its offerings in segments such as fraud protection,
advanced persistent threat protection, zero-day vulnerabilities,
endpoint security as well as threat intelligence services. We
believe that the improved product portfolio will help IBM to win
more U.S. Federal government deals, which has been a major source
of revenues for the company over the years.
IBM recently won a cloud-computing contract from the U.S.
Department of the Interior to improve the government's IT
infrastructure using its Smart Cloud technology. The deal made a
meaningful contribution of $1.0 billion to IBM's kitty and
countered the loss of the $600.0 million CIA contract.
Lately, cyber security has been a growing threat for
organizations of all size. The recent data leakage from the
National Security Agency has raised several questions over the
competency of the government's cloud storage systems.
As per a recent report published by global defense website
"www.defencetalk.com", the cyber security market is expected to
grow to $93.6 billion from 2013 to 2023 irrespective of budget
cuts and European slowdown. Europe is projected to be the
second-largest spender with $24.7 billion.
We believe that this huge surge in defense spending provides
significant growth opportunities for cyber security solution
providers such as IBM. We believe that IBM will continue to
pursue strategic acquisitions in this sector to boost its product
portfolio, going forward.
However, IBM is expected to face tough competition from the
EMC Corp (
) in the near term.
Currently, IBM carries a Zacks Rank #3 (Hold).
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