International Business Machines
) continues to go ahead with its acquisition for growth strategy.
The company recently announced the acquisition of privately held
firm The Now Factory, which provides analytics software to
communications service providers (CSPs) to improve customer
Using The Now Factory's software, CSPs can gather real-time
insights about their customers through network and business data
analysis, which will help them to take prudent business decisions
and offer improved services.
This type of software is witnessing an increase in demand,
driven by the volume of real-time data generated by mobile
devices. The CSPs need to process this huge volume of data in
quick time, monitor performance, and understand the impact of
Informa Telecoms and Media, a research firm, estimates that by
2016, the average mobile phone subscriber will use 6.5 times
video, 10 times gaming data, and 8 times more social media and
music data. This presents a huge growth potential for this kind
analytics solutions, in our view.
We believe that this acquisition will help IBM in the long
run, as it adds to "IBM MobileFirst Analytics portfolio," which
is mainly used by organizations to analyze mobile device usage to
enhance customer service.
The current acquisition will expand its product portfolio to
higher-growth segments, such as business analytics, IT security,
cloud computing and software.
In fiscal 2012, IBM completed 11 acquisitions for an aggregate
cost of $3.96 billion. IBM plans to spend approximately $20.0
billion on acquisitions though 2015, which is expected to boost
top-line growth by approximately 2.0%. We believe that IBM will
continue to pursue strategic acquisitions to boost its product
portfolio, going forward.
However, IBM is expected to face tough competition from the
), in the near term.
Currently, IBM has a Zacks Rank #3 (Hold).
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