According to an Israeli newspaper, International Business Machines (IBM) is planning to acquire Guardium, a database security start-up for approximately $225 million.
 
Guardium, a subsidiary of Israel’s Log-On Software did not provide any details on the acquisition. The company has raised approximately $21 million via venture capital investment from Ascent Venture Partners, Israel’s StageOne Ventures and Veritas and Cisco Systems (CSCO). Guardium’s product helps companies to protect their databases and provide enhanced service application to customers.
 
IBM has been building its portfolio through strategic acquisitions, which are generating incremental revenues, strengthening its technology leadership and resulting in a more favorable mix of business.
 
Through increased acquisitions, IBM will be able to deliver growth in service-oriented architecture (SOA), Information on Demand, business process services, open modular systems and business analytics capabilities. IBM continues to seek out new businesses and we believe these acquisitions will leverage IBM’s global scale, thereby creating value for the company.
 
IBM is the leader in the Software, Services and Storage business. The company benefits from cost-cutting measures, a strong liquidity position, operational efficiency, substantial free cash flow and earnings momentum. However, low growth in some of its segments, continued decline in hardware and rising pressure in its Services business may damage IBM’s growth.
 
We maintain our Neutral rating on the stock.
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