IBM will acquire its way to relevance!
https://www.bizjournals.com/triangle/news/2022/05/26/what-ibm-next-acquisition-will-look-like.html
By: Lauren Ohnesorge – Senior Staff Writer, Triangle Business Journal
May 26, 2022
Nearly three years after IBM’s blockbuster $34 billion deal for Raleigh-based Red Hat, Big Blue continues to scout for deals – just not necessarily record-breakers.
“M&A is something we’re always looking at,” Rob Thomas, IBM senior vice president of global markets, told analysts at JPMorgan’s 50th Annual Global Technology, Media and Communications Conference this week. “What happens any given month or quarter in the market doesn’t really change the philosophy. We are always looking at M&A to drive growth, to fill in portfolio gaps, whatever those may be, and that’s what we’ll continue to do.”
But Logan Purk, an analyst with Edward Jones, said not to expect another Red Hat deal – at least not any time soon.
“What M&A for IBM going forward, it’s likely smaller tuck-in deals that either add some capabilities to their platform or bring in some consulting expertise,” he said. “I just think it’s a challenge for them to make bigger deals just because I don’t think they have the balance sheet capacity to do it right now.”
He sees deals so small their terms will not be required to be disclosed by the SEC. Purk points to areas such as automation, artificial intelligence and cloud computing as areas where IBM (NYSE: IBM) watchers can expect the next deals to happen.
Thomas told analysts that in two years the firm has done 24 acquisitions, half in consulting, half in software. Consulting deals have focused on the firm’s “big strategic partnerships” with companies such as SAP and Salesforce.
“We’ve basically acquired capabilities, skills in those areas that helps us build practices faster, including assets that help us drive workloads with those companies,” Thomas said. And on the software side, it’s been about enhancing focus areas and existing technologies. Thomas pointed to the firm’s buy of Turbonomic last year.
IBM already had Watson AIOps, “the brains for how you understand what’s happening in an IT environment,” Thomas said. “But the brain is only as smart as the data that you can feed it. And so we bought Turbonomic, which looks at compute storage and networking, can feed that into Watson AIOps.
Financial terms of the Turbonomic deal were not disclosed.
Thomas also touched on IBM’s return to the office – something other executives also touched on earlier this month in respons.
“What we found is people actually are really interested in getting back to the office,” Thomas said. “They may not know it, but the minute they do it, they’re like, ‘Wow, this is what I was missing.’”
While Thomas said he doesn’t envision all IBMers in the office every day, “coming into an office for the activities that make sense, makes a lot of sense.”