The past 30 days have been quite remarkable, even for a company the size of IBM
In yesterday's deal, IBM shelled out $1.3 billion for Internet Security Systems
Moreover, security is still a growth market since it's a "must have" for corporate America. Witness AOL's release of search query results on the Internet. It was a serious breach of privacy and a huge embarrassment, resulting in the resignation of the chief technology officer.
So, it would not be a surprise to see more security deals from IBM, as well as a host of other players including Hewlett-Packard
Does this mean you should heighten your interest in publicly traded security companies like Check Point Software
However, security is only one piece of IBM's strategy. With its recent acquisitions, it looks like it's building a one-stop set of offerings. For example, there's the $1.6 billion purchase of FileNet, which helps companies manage unstructured content like emails and spreadsheets. There's also the $740 million purchase of MRO, which helps track corporate assets. And there are rumors that IBM wants to buy a business-intelligence vendor like Cognos
The good news is that, for the most part, these mid-tier software companies are relatively inexpensive because of their reliable customer bases and strong cash flows. What's more, these customers are good candidates for IBM's massive services business.
Finally, according to a recent analysis from Fool colleague Brendan Mathews, IBM appears to be selling at a discount to its assets value. Given that software provides the highest margins, the valuation case is even better. If software has helped Hewlett-Packard
For further Foolishness:
- IBM Files Another Big Deal
- IBM: Big Value at Big Blue
- To BEA, or Not to BEA?
- BMC Means "Buy My Company"
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Fool contributor Tom Taulli does not own shares mentioned in this article.