To strengthen its storage capabilities and expand its product
portfolio in the solid state device ("SSD") storage solutions
) is set to acquire Texas Memory Systems, a privately-held flash
memory solutions provider. The financial details of the deal were
Based in Houston, Texas Memory Systems operates globally through
a number of resellers, channel partners and industry partners. The
company has strategic partnerships with technology bellwethers such
Cisco Systems Inc.
) to name a few. Texas Memory Systems provides its storage
solutions into a number of industries that range from financial,
high performance computing, telecom, and e-commerce to health
IBM has been delivering cost effective, power-efficient
enterprise solid-state storage technologies and solutions. The
integration of Texas Memory Systems' offerings will further
strengthen IBM's position in the storage market.
Moreover, according to a research report from IDC, SSD
industry's revenue in 2012 is expected to increase significantly
from 2011. This increase will be primarily driven by technology
innovations and enhancements and near-term shortages in the hard
disk drive ("HDD") segment.
Moreover, SSD price declines in the second half of 2012 will
also help drive revenues. In 2011, revenue from the SSD industry
was $5 billion, soaring 105% from 2010. Additionally, IDC estimates
global SSD shipments to grow at a 51.5% CAGR from 2010 to 2015.
Though the adoption rate in the SSD has been soft in the near
term but is expected to pick up on a longer-term basis because it
is more efficient and fast. We believe that IBM is well poised to
grab the opportunity in the SSD market with its own product
portfolio and through its strategic acquisitions.
IBM intends to spend $20 billion up to 2015 on acquisitions. We
expect IBM to continue to acquire companies that are strategically
important to achieve its 2015 goals.
We believe that IBM's strong product pipeline, expansion into
emerging markets and continuous acquisitions will help it to
achieve long-term growth. However, we remain cautious on the
overall IT spending environment and believe macroeconomic concerns
will continue to hurt IBM's growth in the near term. Increasing
competition in most of IBM's markets is an added concern.
Thus, we remain Neutral over the long term. Currently, IBM has a
Zacks #3 Rank, which implies a Hold rating in the near term.
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