Expanding its reliance on software is one reason the Armonk, N.Y.-based company is able to keep improving profits even as sales fall because of the economy.
In the latest quarter _ the three months ended June 30 _ IBM's software division contributed 43 percent of IBM's overall pretax profit. Having sold off its personal computer and printing businesses, IBM makes most of its money off services and software. One result of the transformation is that IBM, a company known for its mainframes and other computers that have powered back offices for decades, is less reliant now on hardware. Fifty of those acquisitions have been software companies. IBM has spent more than $20 billion since 2003 on more than 80 acquisitions. The acquisition fits with IBM's strategy of strengthening its software and services divisions as a critical part of a makeover over the past decade. The company had $303 million in sales last year and $36 million in profit.
SPSS has more than 1,200 employees in 60 countries. The deal is expected to close later this year, and is subject to shareholder and regulatory approval. "With this acquisition, we are extending our capabilities around a new level of analytics that not only provides clients with greater insight _ but true foresight," Ambuj Goyal, general manager of IBM's Information Management group, said in a statement. universities and consumer goods, pharmaceutical and market-research companies. The company claims its customers include agencies in all U.S. SPSS's technology is used to comb through stockpiles of data to predict things such as how a customer will respond to a particular sales pitch, or where hot spots for crime are and where police should be deployed. it's well established and well regarded," King said. "This is really a Cadillac-style technology. 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. The all-cash deal announced Tuesday represents a 42 percent premium over Chicago-based SPSS's closing price of $35.09 on Monday. is bulking up its most profitable division with a $1.2 billion acquisition of business software provider SPSS Inc., a deal that also reflects the power of wealthy technology companies to throw their money around despite the recession.