What’s IBM Really Pushing with the Resilient Buyout?
Spree or Scramble? Key Updates on Acquisitions in the Tech Sector
IBM’s Resilient buyout is in sync with strategic imperatives
Previously in this series, we discussed IBM’s (IBM) recent acquisition of Resilient Systems. We also discussed how the decline in the share prices of various cybersecurity companies has made them an attractive acquisition target for big tech companies like Cisco Systems (CSCO) and IBM.
Cisco has reported that its cybersecurity revenue grew by 12% to $1.8 billion in 2015. IBM (IBM) achieved the same growth in its cybersecurity revenue in 2015. But despite clocking billions in revenues from security offerings, security revenues make up less than 5% of both IBM’s and Cisco’s overall revenues.
Security is an integral component of IBM’s Strategic Imperatives (which refers to its investments and initiatives in cloud, analytics, mobile, social, and security technologies). IBM’s Strategic Imperatives segment’s revenues grew by 17% in 2015, while their contribution rose to 35% in fiscal 2015. In 2014, this segment’s contribution stood at 27%. IBM’s recent acquisition of Truven in February 2016 to push its Watson platform is also likely to contribute significantly toward the growth of the company’s Strategic Imperatives.
Cloud, mobile, IoT, and cognitive computing technologies
As the above presentation by IBM and Statista shows, cloud computing, mobile, IoT (Internet of Things), and cognitive computing are expected to be the technologies that will shape the near future. This helps explain IBM’s intent to push “strategic imperatives,” through which the company expects to revert to growth and make up for falling revenues.
Despite IBM’s Strategic Imperatives double-digit growth and more than $3 billion in spending to acquire 14 companies in 2015, revenue growth continues to be elusive for the company. Notably, IBM has not posted any revenue growth for the past 15 consecutive quarters.
Considering the growth expected in the cloud space, IBM’s peers are also on an acquisition spree. For example, Microsoft (MSFT), in accordance with its “Mobile-First, Cloud-First” Strategy, is rapidly acquiring companies in cloud space in 2016. Recently, Oracle (ORCL) announced the acquisition of Ravello Systems, an Israel-based (ISL) (EIS) cloud computing company.
Now let’s examine Cisco’s Acquisition of CliQr.
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