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M&A Fires Up the SPIT Sector

Heavy Lifting Analyst Notes
Heavy Lifting Analyst Notes
Heavy Lifting Analyst Notes
9/27/2010

The service provider IT (SPIT) sector has seen some intriguing activity on the M&A front in recent months. The deals so far haven't been of the ground-shaking variety – for the most part, acquirers have been focusing on a handful of strategic goals, like filling a nagging portfolio gap, acquiring customers, or expanding geographical reach. But taken together, these deals show just how important the service provider sector is becoming to IT vendors.

IBM Corp. (NYSE: IBM) has led the way in M&A aggressiveness this year. IBM's purchases of Unica, Sterling Commerce, and Coremetrics have beefed up IBM's portfolio, particularly in the concept-to-cash value chain, with products that help network operators automate, manage, and accelerate core business processes across marketing, sales, order processing, and fulfillment. (See IBM to Acquire Marketing Software Firm Unica, IBM to Buy Sterling Commerce, and IBM to Acquire Coremetrics.)

Earlier this year, IBM also bought IP device management specialist Intelliden to revamp its Tivoli service management suite. Intelliden provides device management capability and a robust D&R solution to perform real-time and continuous reconciliation of network resource data. This solution will enhance the Tivoli suite by helping IBM to improve inventory accuracy, manage device compliance through real-time detection of network changes, and help in rapid remediation of those changes with third-party systems such as inventory, fault management, and configuration management database. (See IBM Makes Intelliden Buy.)

IBM has made significant investment in the analytics and business intelligence (BI) space through its earlier acquisitions of Cognos and SPSS. Its recent decision to buy Netezza, a data warehouse company, is complementary to its BI strategy, as data-warehousing and BI go hand in hand. Netezza's acquisition will complete IBM's analytics and BI story and will help the company to compete effectively with data-warehouse powerhouse Teradata (NYSE: TDC). (See IBM Buys Cognos for $5B, IBM to Acquire Predictive Analytics Firm SPSS, and IBM to Buy Netezza.)

Today, CSG Systems International Inc. (Nasdaq: CSGS) announced its intent to purchase Intec Telecom Systems plc (London: ITL) for approximately $370 million. CSG has lacked a comprehensive postpaid billing, mediation, customer care, and interconnect capability since selling off its Kenan assets to Comverse Technology Inc. (Nasdaq: CMVT) in 2005. With time, its dominance in the North American cable market has been marginalized by Amdocs and Convergys – both heavyweights in the BSS/OSS space. As a significant player in the BSS space, Intec will help CSG to close the gap in its portfolio. CSG's Kenan acquisition strategy in the past was not successful; only time will tell how effectively CSG will be able to handle this acquisition. (See CSG to Buy Intec for £237M.)

Other significant acquisitions that have occurred in the SPIT space include:



— Ari Banerjee, Senior Analyst, Heavy Reading

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digits
digits
12/5/2012 | 4:22:05 PM
re: M&A Fires Up the SPIT Sector


I expect we'll see more of the same, and that includes acquisitions by major players such as HP, Oracle, and IBM that, in the past, might not have been regarded as particularly relevant to the telco world but which now can have an impact on the packages these giants can deliver to the carriers.


 


It'll be interesting to see which companies (if any) might fancy a slice of Comverse... see


http://www.lightreading.com/document.asp?doc_id=197853 

digits
digits
12/5/2012 | 4:22:05 PM
re: M&A Fires Up the SPIT Sector


I wonder if CSG might find itself in a bidding war over Intec?

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