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International Business Machines Corp. (NYSE:IBM) Acquires Ustream for Around $150 Million

International Business Machines Corp.(NYSE:IBM) Earnings

American Multinational technology firm, International Business Machines Corp.  Corporation, has acquired Ustream. Ustream has been in operation since 2007, providing video streaming services to around 80 million viewers worldwide. International Business Machines (IBM) Corporation shares are up by more than 1% today. The acquisition is perhaps the reason for this increase. The acquisition of Ustream is reported to have cost International Business Machines (IBM) Corporation around $150 million.

International Business Machines Corp.(NYSE:IBM) Earnings

By acquiring Ustream, International Business Machines Corp.  is entering the live video streaming market. IBM predicts the demand in cloud-based video services to be more than $100 billion in 2016. IBM Cloud Senior Vice President Robert LeBlanc said that “Video has become a first-class data type in business that requires accelerated performance and powerful analytics that allows clients to extract meaningful insights”.”Aligning our expansive video and cloud innovations into an integrated unit will create opportunities for clients to take advantage of this medium in the most strategic way possible.”

Ustream offers live & on-demand videos for customers such as NASA, Nike, Facebook Inc  and The Discovery Channel. International Business Machines Corp.  recently acquired cloud video company Clearlep, showing IBM’s growing interest in the cloud-based video market, due to predicted growth.

International Business Machines (IBM) Corporation is listed on the New York Stock Exchange (NYSE), with a market capitalization in excess of £110 billion. Ustream, which is based in San Francisco, is a strategic acquisition for International Business Machines (IBM) Corporation for a number of reasons. Ustream’s website (http://www.ustream.tv/) has an alexa rank of around 1,500, and Ustream is also the live game streaming service for Sony’s PS4 gaming system / console.

It is unknown if IBM will continue to purchase more firms that operate in this market, but it is a likely prospect, given IBM’s interest in the sector. Previous acquisitions made by the firm include the purchase of Kenexa in 2012 & SPSS in 2009. A much more recent and much larger acquisition by the firm was the purchase of Merge Healthcare INC in August 2015 for $1 billion.

In 2012, International Business Machines (IBM) Corporation was ranked by Forbes as the second largest U.S. firm based on the number of its employees (IBM has around 435,000 employees worldwide.) In 2014, the firm made a profit of around $12 billion, with a turnover in excess of $90 billion. Forbes also ranked IBM as the fourth largest U.S company based on market capitalization, as well as being the ninth most profitable.

IBM has invented several pieces of technology that have been widely used e.g. the automated teller machine (ATM), the hard disk drive & the floppy disk. Therefore, it is not surprising that the firm is so interested in the cloud-based video market, as they have been at the forefront of technology development for years, supplying innovative goods internationally.

This latest acquisition (of Ustream) comes despite economic turmoil, caused primarily by the economic slowdown in China, as well as the falling value of crude oil (less than $30 a barrel.) This further reinforces and demonstrates IBM’s commitment to technology development, as well as maximising their profitability. 

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