Brocade Communications (NASDAQ:BRCD) is up 22.3% and hanging right at 52-week high range after news that it's in talks to sell itself and getting close to the end of that process.
A deal could be announced this week, Bloomberg reports, and one of the interested parties is reportedly Broadcom (AVGO +0.7%), which could be interested in supplementing its switch-chip business with Brocade's networking gear. Broadcom CEO Hock Tan has said he's interested in acquisitions.
Such a deal might allow for better competition against much bigger rival Cisco Systems (CSCO +0.4%). "A purchase by Broadcom (Avago) would be a strategic move by Broadcom to vertically integrate in an IP switching and routing market that has increasingly moved to merchant silicon," notes Stifel analyst Aaron Rakers.
He's maintained a Hold rating and $10 price target (the boost today has put Brocade at $10.63). He doesn't know any inside information about activity around Brocade this week but notes that for years, talk has persisted that Brocade might sell itself to suitors like H-P (NYSE:HPQ), Oracle (NASDAQ:ORCL) or IBM (NYSE:IBM).
With current net debt (about $440M) and at $11/share, Brocade would come at about a $4.9B enterprise value, 7.3 times EBITDA, he says.
(NYSE:IBM) acquires Kent, England-based Optevia, a software as a service (SaaS) systems integrator specializing in Microsoft Dynamics CRM solutions for public sector organizations, for an undisclosed sum. The company will be incorporated into IBM's Global Business Services group.
Optevia, founded in 2001, focuses on UK Emergency Services Central Government, Local Government, Health Authorities and Housing and Social Enterprises. Its clients include ministries, councils, regulators, licensing and grant management organizations, transport authorities and social housing organizations.
Continuing its recent M&A spree, IBM (IBM +0.3%) is acquiring Resilient Systems, a provider of incident-response security software to 100+ Fortune 500 and mid-sized companies. Terms are once more undisclosed.
Resilient's platform is declared to automate and orchestrate "the many processes needed when dealing with cyber incidents from breaches to lost devices." It features Privacy, Security, and Action modules, and integrates with numerous third-party security apps.
In tandem with the purchase, IBM is creating a new services business (called X-Force Incident Response Services) that will rely on 3,000 consultants and security researchers to help companies "plan for, manage, and respond to cyberattacks." Resilient's software will help underpin the services, and will also be integrated with Big Blue's QRadar security intelligence platform and other security products.
FireEye's Mandiant unit is a major player in the incident-response services space. Microsoft and Cisco have also shown an interest in this space.
In a big expansion of the company's healthcare bet, IBM's Watson Health unit is buying Truven Health Analytics, a provider of healthcare data and analytics services for healthcare providers, enterprises, governments, and life sciences firms, for $2.6B from investment firm Veritas Capital. The deal is expected to close later this year.
The deal comes six months after one to buy top medical imaging software firm Merge Healthcare, and ten months after the purchases of patient data analysis software firm Phytel and clinical database provider Explorys. The Phytel/Explorys deals coincided with the launch of Watson Health, which aims to provide software/services that can deliver insights from large volumes of anonymized patient data.
Truven has over 8,500 clients, and will boost the size of Watson Health to over 5,000 employees. IBM: "Upon completion of the acquisition, IBM's health cloud will house one of the world's largest and most diverse collections of health-related data, representing an aggregate of approximately 300 million patient lives acquired from three companies. IBM plans to integrate Truven's extensive cloud-based data set spanning hundreds of different types of cost, claims, quality and outcomes information with its existing data sets."
Big Blue adds data/insights provided by Truven "inform benefit decisions for one in three Americans," and that Truven's "cloud-based technology, methodologies and health claims data" will be integrated with the Watson Health Cloud platform for providing cloud-based healthcare analytics and data sharing.
Five days after announcing it's acquiring Columbus-based online ad agency Resource/Ammirati, IBM (IBM -1.4%) says it's acquiring Aperto, a Berlin-based online ad agency whose client list includes Airbus, Volkswagen, and Siemens. Terms are once more undisclosed.
Like Resource/Ammirati, Aperto has 300+ employees and will join IBM's Interactive Experience (iX) digital agency unit (has over 10K employees). IBM, which has made a series of software and services-related acquisition to help benefit from rising online ad spend and a shift in IT spending towards CMOs: "Demand for [ad] experience design is expected to accelerate as clients in all industries seek to deliver more consumer-like experiences to their customers and employees, and integrate the power of cognitive computing and analytics platforms."
The moves follow a Q4 in which Big Blue's Global Tech Services and Global Business Services revenue respectively fell 7.1% and 9.9% Y/Y to $8.1B and $4.3B. Both forex and the impact of cloud services adoption on on-premise IT services spend weighed.
In its first purchase of an online ad creative agency, IBM is acquiring Resource/Ammirati, a Columbus-based firm declared to be "one of the top, digitally-led creative agencies in the US." Terms are once more undisclosed.
IBM: "The acquisition of Resource/Ammirati supports IBM's goal of helping clients digitally reinvent to create transformative brand experiences. Recognized for the groundbreaking technology and analytics capabilities of Watson , IBM has over 1,000 designers working with strategists, developers and consultants to combine the power of design and technology for clients."
Resource/Ammirati has 300+ associates and a client list that includes Sherwin Williams, Nestle, and Nationwide. The company will join IBM Interactive Experience (IBM iX), a unit containing over 10K employees and proclaimed by Big Blue to be the world's biggest global digital agency.
IBM rival Accenture has made several digital agency acquisitions in recent years. IBM's recent digital marketing efforts have included a partnership with Facebook to help Facebook clients improve ad targeting, as well as the purchase of marketing automation software firm Silverpop.
Citing higher deal risk and weakening NAND fundamentals, CLSA's Mark Heller has downgraded SanDisk (SNDK -1.6%) to Underperform, and cut his target by $16 to $70.
Heller doesn't think weakening fundamentals will unravel Western Digital's (WDC -2.2%) pending cash/stock acquisition of SanDisk, but is worried about the potential for Tsinghua Unigroup subsidiary Unispendour to walk away from its deal to buy a 15% stake in Western for $92.50/share (107% above Western's Friday close).
If Unisplendour was to walk away, Heller sees Western shareholders deciding on the SanDisk deal. The deal calls for Western to pay $85.10 in cash and issue 0.0176 shares for each SanDisk share provided the Unisplendour investment has closed prior to the acquisition. If it hasn't, the cash payout drops to $67.50, and the stock payout rises to 0.2387 shares. SanDisk currently trades below $67; deal closing has been forecast to occur in calendar Q3.
Separately, Western has announced the purchase of over 100 IBM "patent assets" related to distributed storage, object storage, and non-volatile memory, as well as a cross-licensing deal with the IT giant; terms are undisclosed. Western says the purchase will augment an existing portfolio of 10K+ patents and patent applications.
SanDisk's Q4 report arrives on Wednesday. Western's FQ2 report is due on Thursday.
Less than 24 hours after Fortune reported IBM (IBM +1.7%) is in talks to buy live video streaming/delivery platform Ustream, IBM has confirmed the deal. As usual for IBM acquisitions, terms are undisclosed.
IBM: "[Ustream] streams live and on-demand video to about 80 million viewers per month for customers such as NASA, Samsung, Facebook, Nike and The Discovery Channel ... IBM will deliver a powerful portfolio of video services that spans open API development, digital and visual analytics, simplified management and consistent delivery across global industries." The company also talks up the Ustream Development Platform (lets clients create custom video apps) and Ustream's social sentiment analytics services (used to gauge audience reactions to streams).
Assets from Ustream will be added to a new Cloud Video Services unit that also features assets from recently-acquired Clearleap (provides video streaming, encoding, management, and monetization services), technologies obtained from the acquisitions of Cleversafe (object storage systems) and Aspera (high-speed file transfer software), and "IBM R&D innovations."
The Ustream and Clearleap purchases follow public cloud rival Amazon's purchase of major video encoding/delivery software and services provider Elemental Technologies. Brightcove (BCOV +0.7%) is a notable independent player in the video streaming/monetization space.
With the help of higher markets (the S&P is up 1.1%), IBM is bouncing a day after falling sharply in the wake of its Q4 report and light 2016 guidance.
Three months ago, IBM (IBM -4.6%) fell towards $140 after providing a 2015 EPS guidance cut to go with mixed Q3 results. Today, shares are almost $20 lower as markets react to the light 2016 guidance - EPS of "at least" $13.50, free cash flow of ~$11B-$12B vs. 2015's $13.1B - issued with Big Blue's slight Q4 beat. The S&P is down 0.5%, and the Nasdaq up 0.5%.
Plenty of analyst have (unsurprisingly) cut their targets, but none have downgraded. Aside from forex pressures (expected to hurt 2016 EPS by over $1 as hedges roll off), plenty of concerns have been voiced about IBM's software ops, which were responsible for 46% of the company's 2015 segment op. profit ($9.1B out of $19.7B) and have been hurt by weak deal activity among top-250 clients.
Jefferies' James Kisner (Underperform, $110 target) argues IBM still faces a tough transition as on-premise software and IT services demand continues to be pressured by SaaS/cloud adoption. He also estimates Q4 EPS would've been $4.54 (below a $4.81 consensus) if not for a lower tax rate, and states services signings of $16.7B fell short of a $19.1B consensus.
RBC's Amit Daryanani (Neutral, $135 target): "Based on tepid EPS/[free cash flow] guide and continued software declines, and System-Z entering the end of the mainframe cycle, we continue to stand on the sidelines." Drexel Hamilton's Brian White (Buy, $160 target) remains bullish, calling EPS guidance conservative and talking up IBM's 4.1% dividend yield.
Separately, Fortune reports IBM is in advanced talks to buy Ustream, a provider of live video streaming, transcoding, and delivery services for businesses, for $130M in cash + possible earn-out/retention payments. The report follows IBM's December acquisition of cloud video infrastructure service provider Clearleap, which the company plans to integrate with its existing cloud offerings.
Fortune notes IBM and Ustream are already partners, with Ustream's offerings already integrated with IBM's Bluemix cloud app development platform. The startup's customers include Sony and NASA.
Continuing its analytics-related acquisition spree, IBM (IBM -2%) has bought IRIS Analytics, a German provider of software for detecting payment fraud in real-time, investigating fraud cases, and modeling/simulating a company's response to a fraud event. Terms are undisclosed.
IBM: "IRIS provides a real-time fraud analytics engine that leverages machine learning to generate rapid anti-fraud models while also supporting the creation and modification of ad-hoc models, proven successful on various sized payment platforms ... IRIS serves to bridge the gap between expert-driven rules and traditional predictive modeling by applying artificial intelligence and cognitive techniques to partner with human experts in suggesting best fit analytics interactively, while testing and deploying models with real production data, as it happens and without downtime."
Big Blue adds IRIS is used by "leading banks and payment processors throughout the world," and allows fraud countermeasures to be deployed faster than existing techniques relying on "black box" models. The purchase follows IBM's 2013 acquisition of malware-protection software firm Trusteer (used by many top banks), and its 2011 purchase of security analytics firm i2 (used by law enforcement agencies and companies to detect illicit activity within operational log data).
IBM is lower on a morning the S&P is down 2.3%, and the Nasdaq 2.7%. Q4 results arrive on Tuesday afternoon.
Cisco (NASDAQ:CSCO) could make a bid for storage array vendor NetApp (NASDAQ:NTAP) and threat-prevention hardware/software provider FireEye (NASDAQ:FEYE) in 2016, thinks FBR's Dan Ives. Cisco/NetApp speculation has been around for a while. Meanwhile, Cisco has made several security acquisitions in recent years, and appears to be up for more, but has also launched products that compete with FireEye.
Ives also thinks IBM could bid for machine/log data analytics software leader Splunk (NASDAQ:SPLK) and business intelligence/data visualization software firm QLIK. With a $7.6B market cap and high multiples, Splunk would be a costlier acquisition than IBM's traditional fare.
HP Enterprise (NYSE:HPE), meanwhile, is seen as a potential suitor for both Qlik and enterprise cloud storage/file-sharing leader BOX. And Oracle (NYSE:ORCL) a potential buyer of cloud ERP, HR, and e-commerce software firm NetSuite (NYSE:N). Larry Ellison owns a large stake in NetSuite (more SMB-focused than Oracle), and the company both competes and partners with Oracle.
Microsoft (NASDAQ:MSFT), which has made plenty of acquisitions in the Satya Nadella era, is seen as a potential buyer of database security software and Web app firewall vendor Imperva (NYSE:IMPV), as well as of cloud vulnerability management and compliance software firm Qualys (NASDAQ:QLYS). Symantec (NASDAQ:SYMC), which has signaled it will make security acquisitions after the sale of its Veritas unit closes, is considered a possible acquirer of e-mail/compliance security software provider Proofpoint (NASDAQ:PFPT).
Yesterday: FBR sees improving cybersecurity spend, likes several stocks
Clearleap provides a cloud-based platform for encoding, streaming, managing, and monetizing video content to clients such as HBO, A+E Networks, Verizon, Time Warner Cable, and BBC America. Acquisition-hungry IBM (IBM -1.3%) has bought the company for an undisclosed sum.
Big Blue will integrate Clearleap with its existing cloud offerings "to provide enterprises with a fast and easy way to manage, monetize and grow user video experiences and deliver them securely over the Web and mobile devices" It adds Clearleap's open API framework allows video to be easily embedded into applications, as well as be integrated with existing workflows and analytics software.
Clearleap's services will be offered via IBM data centers, and its APIs added to IBM's Bluemix cloud app platform (PaaS) in 2016. The acquisition follows the October purchase of Cleversafe, whose object storage hardware and software is often used to handle video storage.
Gravitant provides software that helps enterprises compare and analyze the cloud services offerings of various providers, and subsequently purchase and manage/monitor those services. IBM (IBM +1.6%) has bought the company for an undisclosed sum.
IBM exec Martin Jetter, whose company has been selling enterprises on adopting its SoftLayer, Watson Analytics, and Bluemix cloud platforms (among others): "The reality of enterprise IT is that it is many clouds with many characteristics, whether they be economic, capacity or security. Gravitant provides an innovative approach to add choice and simplicity to how enterprises can now manage their environments." Gravitant will be integrated with IBM's Global Tech Services unit, and also with its SaaS (cloud app) lineup.
The purchase follows last week's deal to buy The Weather Company's digital assets (reportedly for $2B+). Other 2015 cloud-related acquisitions include Workday service provider Meteorix and OpenStack managed cloud service provider Blue Box.
Confirming yesterday evening's WSJ report, IBM (IBM +2.2%) states it's buying The Weather Company's B2B, mobile, and cloud-based Web properties, including Weather.com and Weather Underground, Terms are undisclosed; the WSJ reported of a $2B+ purchase price.
IBM suggests the value of The Weather Co.'s cloud data platform goes well beyond weather, and will bolster both its Watson Cloud platform and a new Watson IoT unit that will provide A.I.-driven analytics services for data produced by Web-connected embedded devices.
IBM: "The Weather Company's cloud-based data platform will allow IBM to collect an even larger variety and higher velocity of global data sets, store them, analyze them and in turn distribute them and empower richer and deeper insights across the Watson platform ... The Weather Company's mobile and web properties handle seven times the volume of the world's leading search engine, while serving 82 million unique monthly visitors ... [The platform] can ingest a wide range of data at massive speed and scale, supporting an incredible volume of queries at very low latency."
At the same time, IBM argues weather-related analytics is a major opportunity by itself, given weather's impact on global GDP. It notes The Weather Co.'s models "analyze data from three billion weather forecast reference points, more than 40 million smartphones, and 50,000 airplane flights per day," helping it service "more than 5,000 clients in the media, aviation, energy, insurance and government industries."
In August, IBM struck a $1B deal to buy medical imaging software firm Merge Healthcare, with plans to integrate merge with its new Watson Health unit and deliver image analytics services. An IoT-related analytics partnership was formed with CPU core giant ARM in September.
Update: Forrester's Ted Schadler offers some thoughts on IBM's motivations for making the deal. "[B]usinesses need insights services injected into their real-time processes and applications. TWC gives IBM a hugely valuable and differentiated source of data and insights that it can pre-integrate with other major sources, including Twitter sentiment insights and Box's document market. By pre-integrating these data, building predictive and cognitive models on them, and blending them with your data, IBM is in a position to deliver differentiated insights services."