This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

IBM Picks Up Cognos

IBM's (IBM - Get Report) $5 billion acquisition of Cognos (COGN) is the company's largest takeover in its history, and underscores the importance that software plays in reaching its long-term financial goals.

The deal adds to a series of acquisitions and upgrades aimed at moving IBM's mature software business onto a growth track. The company hopes that sales of business applications will grow to account for 50% of total pretax earnings by 2010, which can help it boost annual earnings per share to $11 from $6.06 in 2006.

"The transaction wasn't entirely unexpected, and fits with the company's plans to move into higher margin software and services business," said Tony Trzcinka, a portfolio manager with Pax World. Pax holds about 30,000 IBM shares in its growth fund, accounting for about 2.5% of assets.

During a conference call with the press, IBM said it expects to receive shareholder and regulatory approval during the first quarter. The company would not say how the deal will affect its 2008 earnings.

Acquisitions have played an important role in helping IBM transition away from commodity hardware businesses into higher margin business. Since Sam Palmisano became chief executive and chairman, IBM has spent $17.2 billion to acquire 61 companies, with software companies accounting for 38 of those transactions.

Also, IBM has tried to make its business software more attractive by features like instant messaging, blogging and user profiles that mimic social networking sites like Facebook and News Corp.'s (NWS - Get Report) MySpace.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
HPQ $33.26 0.00%
IBM $169.78 0.00%
MSFT $47.87 0.00%
ORCL $43.08 0.00%
NWS $15.43 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs