IBM to Buy SoftLayer


IBM is going to buy cloud computing provider SoftLayer.

For months, reports have been circulating that IBM and EMC were competing for the right to acquire privately held, Dallas-based SoftLayer, which provides an infrastructure for cloud-centric, performance-intensive applications for mobile computing and gaming, social media, and analytics. However, an EMC spokesman said today the company was not competing with IBM. "EMC was initially approached, uninterested and decided not to bid," said Senior Director for Public Relations Dave Farmer.

Today, IBM confirmed in a press release that SoftLayer had accepted its bid.

IBM Senior Vice President for Global Technology Services Erich Clementi explained the purchase as being part of the company's plan to put together "a portfolio of high-value private, public and hybrid cloud offerings, as well as software-as-a-service business solutions" and part of a bigger plan to derive $7 billion in annual revenue from cloud services by the end of 2015.

The purchase price it's paid for this latest step toward that goal was not disclosed. However, Business Insider is reporting that SoftLayer does $400 million in annual revenue, and could be valued in excess of $2 billion. IBM's own price-to-sales ratio is just 2.2, or less than half the number using those figures.

Editor's note: A previous version of this story indicated that EMC had bid for SoftLayer, but EMC says it did not. The Fool regrets the error.


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Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of EMC and International Business Machines.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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