IBM to acquire business software maker
Big Blue says it will snap up CrossWorlds Software for $129 million in cash, in a move to strengthen its infrastructure software business.
The move builds on IBM's long relationship with CrossWorlds, a company whose software automates tasks such as customer-relationship and supply-chain management. IBM has been integrating CrossWorlds' software with its WebSphere middleware, or e-business infrastructure product, for four years.
CrossWorlds is known for former CEO Katrina Garnett's appearances in some racy advertisements at the height of the dot-com craze. Garnett, who founded the company and stepped down as CEO in October 1999, appeared in print ads that featured her wearing a low-cut black evening dress and that downplayed the company's name by using small print.
Since then, the company has struggled to keep up with larger competitors, such as Oracle, that have made forays into the infrastructure software field. The company has also suffered in the wake of the Sept. 11 attacks, though analysts say Crossworlds is likely to meet September-quarter estimates.
CrossWorlds will report its third-quarter results after Tuesday's closing bell. First Call is expecting the company to lose 4 cents a share.
"The company will likely make the September quarter," said Dain Rauscher Wessels analyst Sarah Mattson, who lowered her estimates for the company in a September research note.
IBM has said that infrastructure software is a priority. Its WebSphere business has already seen strong growth, with revenue up 75 percent over last year's in the third quarter of 2001. The company's integration software, MQSeries, grew 129 percent over the same time period.
The acquisition is expected to close in the first quarter of 2002 and is still subject to CrossWorlds shareholder and regulatory approval.