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90 Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
90
2010
In 2010, the company completed 17 acquisitions at an aggregate
cost of $6,538 million.
Netezza Corporation (Netezza)—On November 10, 2010, the com-
pany completed the acquisition of 100 percent of Netezza, for cash
consideration of $1,847 million. Netezza expanded the company’s
business analytics initiatives to help clients gain faster insights into
their business information, with increased performance at a lower
cost of ownership. Netezza was integrated into the Software seg-
ment upon acquisition, and goodwill, as reflected in the table below,
was entirely assigned to the Software segment. As of the acquisition
date, it was expected that none of the goodwill would be deductible
for tax purposes. The overall weighted-average useful life of the
identified intangible assets acquired was 6.9 years.
Sterling Commerce—
On August 27, 2010, the company completed
the acquisition of 100 percent of Sterling Commerce, a wholly owned
subsidiary of AT&T, Inc., for cash consideration of $1,415 million.
Sterling Commerce expanded the company’s ability to help clients
accelerate their interactions with customers, partners and suppliers
through dynamic business networks using either on-premise or
cloud delivery models. Sterling Commerce was integrated into the
Software segment upon acquisition, and goodwill, as reflected in
the table below, was entirely assigned to the Software segment. As
of the acquisition date, it was expected that none of the goodwill
would be deductible for tax purposes. The overall weighted-average
useful life of the identified intangible assets acquired was 6.9 years.
Other Acquisitions—
The Software segment also completed acqui-
sitions of 10 privately held companies and one publicly held
company: in the first quarter, Lombardi Software, Inc. (Lombardi),
Intelliden Inc. and Initiate Systems, Inc. (Initiate); in the second quar-
ter, Cast Iron Systems; in the third quarter, BigFix, Inc., Coremetrics
and Datacap; and in the fourth quarter, Unica Corporation (Unica),
a publicly held company, PSS Systems, OpenPages, Inc. (Open-
Pages) and Clarity Systems. GTS completed an acquisition in the
first quarter: the core operating assets of Wilshire Credit Corporation
(Wilshire). GBS also completed an acquisition in the first quarter:
National Interest Security Company, LLC, a privately held company.
STG completed acquisitions of two privately held companies: in the
third quarter, Storwize; and in the fourth quarter, BLADE Network
Technologies (BLADE). All acquisitions were for 100 percent of the
acquired companies.
Lombardi is a leading provider of business process manage-
ment software and services, and became part of the company’s
application integration software portfolio. Intelliden Inc. is a leading
provider of intelligent network automation software and extended
the company’s network management offerings. Initiate is a market
leader in data integrity software for information sharing among
healthcare and government organizations. Cast Iron Systems, a
leading Software as a Service (SaaS) and cloud application integra-
tion provider, enhances the WebSphere business integration
portfolio. BigFix, Inc. is a leading provider of high-performance
enterprise systems and security management solutions that revo-
lutionizes the way IT organizations manage and secure their
computing infrastructure. Coremetrics, a leader in Web analytics
software, expanded the company’s business analytics capabilities
by enabling organizations to use cloud computing services to
develop faster, more targeted marketing campaigns. Datacap
strengthens the company’s ability to help organizations digitize,
manage and automate their information assets.
2010 Acquisitions
($ in millions)
Amortization
Life (in Years) Netezza
Sterling
Commerce
Other
Acquisitions
Current assets $ 218 $ 196 $ 377
Fixed assets/noncurrent assets 73 106 209
Intangible assets
Goodwill N/A 1,410 1,032 2,312
Completed technology 3 to 7 202 218 497
Client relationships 2 to 7 52 244 293
In-process R&D N/A 4 — 13
Patents/trademarks 1 to 7 16 14 27
Total assets acquired 1,975 1,810 3,728
Current liabilities (9) (129) (161)
Noncurrent liabilities (120) (266) (291)
Total liabilities assumed (128) (395) (452)
Total purchase price $1,847 $1,415 $3,277
N/A—Not applicable