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IBM makes big acquisition

Posted May 24, 2010

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— IBM (NYSE: IBM) says it is buying AT&T's Sterling Commerce unit, which makes business collaboration software, for $1.4 billion.

The deal announced Monday would be IBM Corp.'s largest acquisition since it bought Cognos in 2008.

"The acquisition ... will expand IBM's ability to help organizations create more intelligent and dynamic business networks by simplifying and automating the way they connect and communicate with customers, partners and suppliers both on-premise or through cloud computing delivery models," IBM said in a statement.

Sterling Commerce maintains a customer base of “more than 18,000” companies worldwide, according to IBM. Customers include H.J. Heinz Co., Motorola Inc., Boise Cascade LLC and Boston Market Corp.

Its software is used for “interactions” between clients in a variety of market segments.

"Our integration solutions enable our customers to connect people, processes and technologies, so they can have seamless and secure integration with any partner, any system, anywhere," Sterling says on its web site.

IBM and AT&T would not disclose Sterling's revenues.

Some 2,500 Sterling employees will be made part of IBM's WebSphere group.

The deal is expected to close in the second half of this year.

AT&T Inc., then known as SBC Communications, paid $3.9 billion for Sterling in 2000, near the peak of the Internet bubble. The price tag was driven by forecasts that all “business to business” commerce would soon be conducted through online marketplaces not unlike a stock exchange, with demand dictating prices more efficiently.

“IBM sees these interactions growing dramatically due to the proliferation of electronic business transactions, from banks exchanging transaction data and manufacturers sourcing raw materials electronically, to retailers automating stock replenishment and managing orders online. Such intelligent transactions, and the software that supports them, help deliver the agility businesses need to be successful,” IBM said in the announcement.

“By acquiring Sterling Commerce technology and its large trading partner network, IBM anticipates it will be able to deliver powerful new cross-channel solutions to its clients,” the company added.

The unit has little connection to AT&T’s main telecommunications business and has maintained its own brand.

AT&T spokeswoman McCall Butler said AT&T’s business has changed since 2000, and Sterling is “no longer core to the company’s long-term strategic objectives.”"Businesses today are operating in a highly competitive global environment in which lines between actions taking place within and outside an organization's four walls are blurring," said Craig Hayman, general manager of IBM's WebSphere group.

"This acquisition will give IBM new tools to help clients build dynamic business networks that connect partners, suppliers and clients and deliver a consistent customer experience across channels," he added. "In addition, the fact that much of this can be done in the cloud will make it compelling to large numbers of our customers."

IBM employs some 10,000 people at its campus in RTP.

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  • itsnotmeiswear May 24, 2010

    "I work in the EDI industry and citizen782 is the only person who's posted the reality."- RIPCORD

    You may work in EDI, but unless you have worked for IBM, you have no idea how stupid some of the layoffs have been so absolutely nothing is sacred. The managers sole objective is to get rid of cost with no regard for long term service or profitablilty. As a trained executive consultant with intimate knowledge of the process, I can't even begin to tell you how many times I've just sat there amazed at how dumb some of these decisions have been when all of the evidence pointed to another direction.

    I am sure there are some bitter former IBM employees that sound like they are lashing out, but the truth is that there are many, many more that have stories that would be unbelievable to reasonable people. Most people would say " No way that could happen. Nobody with that kind of job would be that short sighted."

  • whatelseisnew May 24, 2010

    "Here come more layoffs."

    Of course, some current IBM employees will be let go and some of the ones from the company IBM just purchased will be let go. With any luck they will have fewer employees in the U.S. when they are done.

  • obs May 24, 2010

    AT&T wouldn't sell it at that price unless they desperately needed cash, and IBM wouldn't buy it unless they had a plan to leverage some short term income off of it. The corporate-speak statements are just to appease the shareholders.

  • john283594 May 24, 2010

    growing by consumption. You can't spend your way to prosperity and you can't lay off your way to success!

  • davidgnews May 24, 2010

    Here come more layoffs.

  • Ripcord May 24, 2010

    I work in the EDI industry and citizen782 is the only person who's posted the reality.

  • Pseudonym May 24, 2010

    Citizen782,

    Is your real name Sam Palmisano by any chance?

  • WatchDogNC May 24, 2010

    At&t once had a slogan, reach out and touch someone. This deal however screams, reach out and punch someone. This acquisition will go down like previous ones. I have seen what happens to good companies that get eaten up by IBM. They dump part of the work force, and make the rest take a pay cut if they want to stay on. Then the customer gets screwed by increased fees, and frustrated when they call for support and get someone who does not speak english.

  • rnrcp May 24, 2010

    Guess this will also give AT&T a reason to layoff more people from all other operations since they are taking a $2.5B loss by selling for $1.4B after buying at $3.9B

  • miketroll3572 May 24, 2010

    And IBM is by no means done with layoffs.....the majority of them have not happened yet and I hear lotus notes is a dead dinosaur.

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