21 November 2007
Lagos — THE International Business Machine( IBM), the world largest computer producer on Monday acquired a new software, Cognos, the last major independent producer of software used to analyze mountains of data, at the rate of $4.9 billion in cash.
The Chief Executive of Cognos, Rob Ashe, said that the takeover of Cognos, which is based in Ottawa by IBM, followed last month's acquisition of the French company Business Objects, another maker of business intelligence software, by SAP of Germany for $6.8 billion.
The software bought over by IBM is the type that sifts through data to tease out things like a customer's buying habits or a corporation's inefficiencies is hardly new and it also has several factors which have prompted the recent interest in the market segment from larger software companies and so led to Cognos's relatively high price tag of the software.
Meanwhile, it is anticipated that if the deal is finally approved by Cognos's shareholders, I.B.M. is going to pay about 5 times the company's annual revenue and 39 times its annual net earnings of about $126 million. The takeover speculation has driven the value of Cognos shares up in recent weeks and the I.B.M. bid of $58 a share represents a 9.5 percent premium to its (IBM) closing price.
But many analysts have analyzed the acquisition as they anticipate that the business intelligence software market is about to enter a period of significant demand from companies and government agencies and so said that because IBM didn't move fast enough to make the purchase, it had to pay a premium. IBM had nothing in this area, IBM had to do something. But because it didn't move fast enough, it had to pay a premium, said Colleen Graham, a research director at Gartner, a technology consulting firm.
The acquisition of Cognos will present I.B.M. with some unusual integration issues as some business intelligence software has traditionally been intended to be compatible with a variety of computer applications from a wide number of software companies.
But according to Sanju K.Bansal, doing that will require cooperation from those other companies on technical issues even though Cognos may find those companies less helpful after it becomes part of I.B.M. He said that those companies don't want to cooperate with I.B.M. because they compete with I.B.M. every day.
In a conference call with reporters, the president and Chief Executive of Cognos, Rob Ashe said he would continue to run the company from Ottawa while I.B.M .which intends to maintain the Cognos brand will go ahead with that name as the company will be an I.B.M. unit rather than a stand-alone entity.
However, in a bid to meeting the new regulatory requirements the acquisition has forced many companies to clean up their computer systems and databases, a process that often involves purchasing large packages of programs from companies like SAP, Oracle and I.B.M.
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