IBM Extends Shopping Spree

ISS, which is headquartered in Atlanta, has 1,300 employees who will join IBM. There will be no layoffs, the companies said. ISS CEO Tom Noonan will lead security operations in global services.

IBM has been gobbling up companies all summer long to boost growth. While acquisitions including Webify, MRO Software and FileNet(FILE Quote) should give a lift to IBM's software business, the ISS bid will help the company in its global services division, which represents the bulk of IBM sales.

Global services "has become a drag on the rest of the company because its growth has been so sluggish," says Bob Djurdjevic, president of Annex Research, which owns IBM shares. "They needed to go on an acquisition binge. IBM global services has largely been absent from that game until today."

The last major purchase by IBM's global services unit was in 2002, when it bought PriceWaterhouseCoopers.

ISS's managed services division, in particular, is a good complement to IBM global services, analysts say.

It's been a healthy part of ISS's business, and "IBM is clearly going to be able to extend that and do a good job of scaling the heck out of it," Jaquith says.

"IBM will give ISS the scale, distribution and army of field reps to scale that technology to a broader customer base," Ives says.