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'Data analytics are must-have': the Washington Post's verdict on the SPSS-IBM deal

by Noelle McElhatton, marketingdirectmag.co.uk 30-Jul-09, 11:09

MEDIA WATCH: IBM's declaration earlier this week that it intends to buy data analytics firm SPSS has the global media waxing lyrical about the benefits of database software. Here are the verdicts on the deal from Business Week, The Times, the Washington Post and the Press Association.

Business Week verdict: data analysis software is must-have for high tech firms

1, The premium paid by IBM for SPSS - 2.6 times SPSS's expected sales for this year - presages richer prices for tech-company deals as the pace of computer industry consolidation picks up. "That's a pretty attractive multiple compared with what we've been seeing in the software space," says Jereme LeBlanc, a principal at investment bank TM Capital.

2. The SPSS deal reflects the eagerness of big tech companies to expand in the market for data analysis software, an area that's growing even as sales in many other software categories decline. Tech companies are chasing growth through M&As as the recession forces customers to tighten information technology budgets.

3. Buying SPSS is a competitive move by IBM against SAS Institute, a privately held maker of data analysis software. It also strengthens IBM's hand against Oracle and SAP, each of which have used deals to expand in business analytics. In 2007, Oracle bought Hyperion Solutions and SAP bought Business Objects.

Washington Post verdict: the SPSS-IBM deal hails return to technology merger mania of early 2000s

1. In a repeat of the dot-com bust of the early 2000s, the tech giants are snapping up competitors at relatively low prices to bulk up and buy into new lines of business so they are better positioned when the economy rebounds.

2. IBM, Intel and Oracle are among the few companies with the resources to make major acquisitions as banks clamp down on borrowing. That sentiment has been reflected in the market, with the tech-heavy Nasdaq outperforming the other major stock indexes this year.

3. The takeovers are patterned after previous downturns. Cisco, which has bought three firms this year, was also among the most aggressive buyers during the downturn of the early 2000s. Software giant Oracle's $7.38 billion purchase of Sun Microsystems was approved by shareholders this month. "You are seeing more consolidation of power," one analyst said, "with the bigger getting bigger and the stronger getting stronger."

Associated Press verdict: IBM less reliant on hardware, places faith in software

1. The SPSS acquisition fits with IBM's strategy of strengthening its software and services divisions. IBM, a company known for its mainframes and other computers that have powered back offices for decades, is less reliant now on hardware. Having sold off its personal computer and printing businesses, IBM makes most of its money off services and software.

2. SPSS's software helps tell companies "what's coming around the corner" and is "a really terrific acquisition" for IBM, said Charles King, analyst with the Pund-IT Inc. research firm.

The Times verdict: Predictive analytics is a really hot area

1. According to Interactive Data, the market research company, the worldwide market for business analytics software will grow by 4 per cent to $25 billion this year.

2. IBM intends to integrate the Chicago-based SPSS, which employs 1,200 people and has more than 250,000 clients around the world, within its information management software portfolio.

3. Tom Smith, a technology analyst at Standard & Poor’s, said: "Predictive analytics 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."