IBM sees more acquisition prospects: CFO

04/16/2008

By Philipp Gollner


SAN FRANCISCO (Reuters) - IBM (IBM.N: Quote, Profile, Research) sees "solid opportunities" for acquisitions, especially in software and technology services, Chief Financial Officer Mark Loughridge said on Wednesday.

"We're looking for acquisitions where we can put in intellectual-property scale," Loughridge told Reuters in an interview after International Business Machines Corp reported better-than-expected first-quarter results.

"We're not buying resources or snap-on divisions" to increase revenue, "but intellectual property that we can rapidly scale for our rapidly growing set of geographies," he added. "Generally, most intellectual property that's rapidly scalable is in fact in software."

Loughridge declined to name companies that IBM may try to acquire, but noted that most of IBM's recent acquisitions have been of software companies. In January, it paid about $5 billion for Canada's Cognos Inc, whose software combs through vast amounts of data to analyze business trends.

Loughridge also noted technology-company valuations are lower now than a year ago as stock markets have declined, making them ripe for takeovers.

"If you look at the first half of last year, valuations were pretty stiff," he said. "Valuations are coming more in line."

"We think it's an environment with solid opportunities," Loughridge added. "The acquisition element is now an operational element of our business, not opportunistic."

IBM, based in Armonk, New York, has spent about $21 billion on 70 acquisitions since 2003, including Cognos, its biggest purchase ever. The company typically acquires companies for several hundreds of millions of dollars to complement existing businesses and avoids mega-mergers.