As predicted in my post about the SAP acquisition of Business Objects, IBM today announced that it has offered $4.9B in a friendly bid to acquire #2 independent business intelligence tools maker, Cognos. Per this New York Times story, the bid amounts to a 9.5% premium over Friday’s closing price, but the story also asserts that seemingly low premium is the result of a run-up in the stock resulting from speculation that such an acquisition was imminent.
With Hyperion acquired by Oracle, Business Objects acquired by SAP, and now Cognos acquired by IBM, all the major players except Microsoft have their BI dance cards filled. Does MicroStrategy end up a tony bachelorette or a wall flower going forward?
Sure, MicroStrategy could theoretically get acquired by Microsoft or SAS, but I don’t see either as particularly likely. By the way, MicroStrategy has done a great job of quietly rebuilding the company after it was wracked by scandal in the post-bubble. For example, in their most recent quarter, they had a healthy net income of $19M on sales of $96M and, on a quick glance, all of their ratios look pretty good to me.
So A+ in execution for MicroStrategy, but the question is does any of it matter? Does the market need a $400M independent BI company? The prevailing wisdom is no. And that wisdom not only was the cause of the recent “wave 2” BI consolidations, it’s also the force behind the wave 1 consolidations as well (e.g., BOBJ/Crystal, COGN/Adaytum, Hyperion/Brio).
Opinion-wise I’d don’t have much to add other than:
- The deal was fairly obvious, speculation was rampant in the blogosphere, and the stock had risen from $37 to $50 in the past 3 months
- It’s part of a broader trend of BI consolidation and beyond that enterprise software consolidation.
- The truly interesting question — and one I started to tee up already here — is whether software industry consolidation will work? Is it really about sales, R&D, and G&A synergies, or is it simply about ego and size? Put differently, is Oracle on track to become General Motors as most people seem to think, or is Oracle on track to become ITT?
See this post for the start of that thread. And see this article on the history of conglomerates for more background. And thanks again to Alex Moissis for getting this whole meme into my head.