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IBM says it may acquire security companies
November 2, 2007 / 1:09 AM / 10 years ago

IBM says it may acquire security companies

BOSTON (Reuters) - IBM, which plans to spend a record $1.5 billion next year to develop and market security products, is seriously looking at using acquisitions to help beef up its offerings in that area, a company executive told Reuters on Thursday.

<p>View of IBM headquarters at la Defense in Paris, May 6, 2005. IBM, which plans to spend a record $1.5 billion next year to develop and market security products, is seriously looking at using acquisitions to help beef up its offerings in that area, a company executive told Reuters on Thursday. REUTERS/Philippe Wojazer</p>

The company, whose third-quarter revenue climbed 7 percent to $24 billion, sees security as a key to growth, said Val Rahmani, IBM’s general manager of infrastructure management for global technology services.

“We’re looking at a lot of different companies right now, as we always do in a number of different spaces within security,” she said in a telephone interview.

A year ago International Business Machines paid $1.23 billion to buy Internet Security Systems. Rahmani declined to say when IBM might make its next purchase of a security company, or whether it was considering deals that size or larger.

It is IBM’s policy never to identify specific businesses that it might buy, to discuss deals that it has considered, or comment on any speculation about its acquisition activities, she added.

But she identified some areas that IBM is interested in: “Keeping the bad guys out and letting the good guys in, authenticating people once they are in and worrying about data if people leave it behind.”

IBM already has “pretty good coverage...but we could always do better,” she added.

She also said companies that are most attractive acquisition candidates are ones that can help IBM better predict future threats.

“This is about understanding where the threats will be before they happen,” she said. “This is what we are very focused on,” she said.

She spoke to Reuters as IBM announced next year’s $1.5 billion budget for developing and marketing its security business.

It is looking to handle security in house, instead of letting that work go to outside firms that specialize in security.

Smaller companies such as McAfee Inc, Check Point Software Technologies Ltd. and Websense Inc. say they have an edge over big technology companies like IBM because they are able to focus on security.

IBM argues it has an advantage because it is able to integrate security into every aspect of a company’s technology systems operations. Key competitors in services include Electronic Data Systems Corp. and Accenture Ltd.

IBM spent more than $5 billion in 2006 on acquisitions, mainly for software companies in a drive to expand its most profitable business.

Reporting by Jim Finkle, additional reporting by Justin Grant in New York

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