In a bid to diversify its storage solutions portfolio,
International Business Machines Corp.
) has acquired Butterfly Software Ltd, a provider of storage
planning software and storage migration tools. Butterfly Software
will be integrated into IBM's Software division. The
financial details of the deal were not available.
Headquartered in the U.K., Butterfly Software provides software
applications facilitating data storage, including the conversion of
data backup from one format to another in a cost-effective manner.
Butterfly provides its storage solutions through its network of
vendors and resellers.
Of late, IBM has been acquiring companies in the storage space.
Last month, IBM acquired Texas Memory Systems, a privately-held
flash memory solutions provider. Texas Memory Systems provides its
storage solutions to a number of industries that range from
financial, high performance computing, telecom and e-commerce to
IBM has been delivering cost effective, power-efficient
enterprise storage technologies and solutions to various
organizations. The integration of Butterfly Software and Texas
Memory Systems' offerings will strengthen IBM's position in the
According to market researcher Gartner, IBM had a 13.8% market
share in the external controller-based ("ECB") disk storage market
in the second quarter of 2012, which shrunk from 15.1% in the
comparable quarter of the previous year. Moreover, its revenue from
the storage segment dropped 2.4% year over year in a scenario where
total revenue from the ECB disk storage market increased 6.7% over
the same period of time. IBM's traditional storage business
suffered due to continuing shift to cloud based storage solutions.
We believe that IBM's acquisition strategy coupled with its
strong product pipeline and expansion into emerging markets will
help it to achieve its long-term growth targets. Moreover, IBM
intends to spend $20 billion through 2015 on acquisitions. We
expect IBM to continue to acquire companies that are strategically
important to achieve its 2015 goals.
However, we remain cautious on the overall IT spending
environment and believe that macroeconomic concerns are the primary
headwinds. Increasing competition from
) 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 short term.
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