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IBM Plans to Make More Storage Purchases After Texas Memory

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IBM Plans to Make More Storage Purchases After Texas Memory
IBM shares rose less than 1 percent to $201.55 at 11:47 a.m. in New York. Photographer: Sean Gallup/Getty Images

Aug. 17 (Bloomberg) -- International Business Machines Corp., following a deal to buy Texas Memory Systems Inc., vowed to continue its five-year shopping spree by acquiring more companies in the storage industry.

IBM announced the purchase yesterday of closely held Texas Memory, a designer of flash memory, without disclosing terms. The goal is to provide a more complete storage system than competitors by assembling the components through purchases of smaller companies, said Bob Cancilla, vice president for storage systems at Armonk, New York-based IBM.

“It’s not the end of our acquisition phase,” Cancilla said. “We’ve been on an acquisition phase for the past four or five years, and this was one of the missing pieces.”

IBM tends to assemble its technology by buying companies that lack a strong sales force or all the parts a client would need, said Mark Moskowitz, an analyst with JPMorgan Chase & Co. in San Francisco, in a note to investors. Houston-based Texas Memory, which specializes in little beyond fast data performance, was a “classic” deal, he said.

Texas Memory’s technology will go into IBM products sold to customers who are managing data centers or analyzing large amounts of data, Moskowitz said.

With the acquisition, IBM can begin producing an “all-flash array” storage system, which doesn’t use hard disk drives, allowing faster performance with lower power consumption. After the deal, expected to close in the fourth quarter, IBM plans to add Texas Memory’s technology to its PureSystems storage product.

“We have a much more comprehensive solution now, and we’re not done yet,” said Cancilla, who declined to provide details of IBM’s acquisition plans for competitive reasons. “There’s clearly a fundamental change occurring in the data center.”

IBM shares rose less than 1 percent to $201.22 at the close in New York. The shares have gained 9.4 percent this year.

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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