IBM, the world’s biggest computer services company will buy Sterling Commerce for $ 1.4 billion in cash.
The company which is currently owned by AT&T Inc. will be sold to IBM according to a statement issued by the company today. The software of the company helps businesses share information and transfer files to other companies.
Sam Palmisano, IBM CEO plans to spend $20 billion on takeovers in the next five years to strengthen the software business. The program from Sterling will allow companies to manage their own networks on external servers. This is a novel concept and is known as cloud computing.
The second half of 2010 is likely to see the closure of the transaction as per the company. Meanwhile AT&T will record a pre tax gain of $ 750 million on the completion of the deal with about 2500 Sterling employees joining IBM’s software division.
The stock price of IBM fell by 63 cents to $124.79 in the New York Stock Exchange composite trading.
Ever since he has taken over as the CEO eight years ago, Palmisano has spent more than $ 20 billion across various purchases while shifting the focus from hardware to software and services business.
With this investment, IBM has become the third largest software making company in the world after Microsoft and Oracle with profits up to 84.6% last quarter. The company has also said that the software business will make up almost half of total profits in five years.
IBM has been focusing on software that helps in improving efficiency of customers by designing programs that analyzes/predicts trends or services.
The company has said this month that the sales of these technologies along with cloud computing and growth markets like India, Brazil will help in the addition of $20 billion in sales by 2015.
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