IBM splashes $1.2 billion on business analytics firm

 

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By Reuters

Posted on 29 Jul 2009 at 08:41

IBM is ready to splash $1.2 billion on business analytics company SPSS, as it steps up its battle with Oracle.

The predictive analytics offered by SPSS, combined with IBM's existing software and consulting skills, can help in preventing fraud or predicting the risks or patterns of a pandemic, IBM claims.

Credit Suisse uses SPSS software to analyse information about its customers, which gives leads to its sales force. Police also use the software to mine data from incident reports to predict patterns of criminal behaviour.

Shareholders of SPSS, which provides software and services to help companies analyse and forecast trends in consumer behaviour, would receive $50 a share, a 42% premium on Monday's closing price.

The proposed acquisition follows Oracle's purchase of Hyperion, SAP's acquisition of Business Objects and IBM's own deal for Cognos.

"We're in a period where consolidation seems to be a rule of the game," says Charles King, an analyst with Pund-IT Research. "SPSS was probably fine on its own as an independent company, but IBM provides the distribution and stability, the economics and technology foundation."

IBM claims it expects double-digit growth in its analytics business despite a weak economy that has forced many companies to cut back on spending.

Big Blue has been shifting its focus from hardware to more profitable software and services over the past decade,

IBM has spent $20 billion buying more than 100 companies since 2000, paying prices that range from as little as $50 million to as much as $5 billion.

"I think they paid a lot for it but it's not unreasonable," says Standard & Poor's technology analyst Tom Smith. "The predictable analytics area is a really hot area, and I would think that companies in that would trade at a premium to companies in other areas of technology."