VMWare to buy AirWatch mobile security firm for 1 54 billion

Cloud software maker VMWare Inc said it would buy privately held mobile security company AirWatch in a deal valued at about $1.54 billion to tap into rising demand for software security, sending its shares up 3 percent in premarket trading.

Mobile security products are in high demand because cyber attacks on mobile devices have grown exponentially in recent years as sales of smartphones and tablets have surged.

Atlanta-based AirWatch, whose rivals include Cytrix, MobileIron and FrontRange, says it has more than 10,000 customers in 150 countries, including nine of top 10 U.S. retailers.

"With mobile device usage becoming more prevalent in the workplace, we believe this acquisition will prove strategic in complementing and enhancing VMWares end-user computing business," ISI Group analyst Brian Marshall said in a note.

VMWare said it would pay about $1.18 billion in cash and about $365 million in installment payments and assumed unvested equity.

The company said it expects revenue growth of 16-20 percent in 2015 and 2016, up from previous forecast of 15-20 percent. VMware expects the acquisition to add to adjusted profit in late 2015.

VMware also said its fourth-quarter adjusted revenue is expected to rise 20 percent to $1.48 billion as it sold more licenses to enterprise customers.

Analysts were expecting $1.47 billion, according to Thomson Reuters I/B/E/S.

VMWare, which has been adding more enterprise customers and renewing enterprise licensing contracts at a higher rate over the last year, said license revenue rose about 18 percent to $687 million in the quarter.

AirWatch, founded in 2003, will become a unit of VMWare but its 1,600 employees will continue to report to AirWatch founder and Chief Executive John Marshall. AirWatch co-founder and Chairman Alan Dabbiere will report to VMWare CEO Pat Gelsinger.

Analyst Brian Marshall said AirWatch had raised about $225 million in funding from Insight Venture Partners and Accel Partners. "AirWatch revenue last year may have been in the $125-$150 million range," he said.

VMware sells virtualization software, which enables the creation of a virtual machine that acts like a real computer with an operating system. This helps companies use server and storage space more efficiently and reduce IT costs.

VMWare shares closed at $97.36 on the New York Stock Exchange on Tuesday.

© Thomson Reuters 2014

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IBM to invest over 1 2 billion in cloud services operations

IBM said Friday it plans to invest over $1.2 billion to expand its cloud services operations.

The computing services company announced it will build 15 data centers around the world this year to add to the 12 it already operates and the 13 it recently acquired through its $2 billion purchase of cloud computing company SoftLayer last year.

Some of the newest data centres to launch are located in China, Hong Kong, London, Japan, India, Canada, Mexico City, Washington, D.C., and Texas. IBM said it plans to have data centres in all major geographic regions and financial centres with plans to expand in the Middle East and Africa next year.

IBM said the new investments will give its business clients the ability to place and control their data globally.

Software stored and accessed on clouds is increasingly popular with businesses because it lets workers in from any Internet-connected device. IBM Corp. started its cloud business in 2007 and has spent billions on cloud-related acquisitions in recent years.

In a statement, IBM said: ""This investment includes a network of data centres designed to bring clients greater flexibility, transparency and control over how they manage their data, run their businesses and deploy their IT operations in the cloud. With this announcement, IBM plans to have data centres in all major geographies and financial centres with plans to expand in the Middle East and Africa in 2015."

Recently, IBM also created a new Watson business group, with hopes to get more revenue from the supercomputer system that beat humans on the television quiz show "Jeopardy". The company said the IBM Watson Group will be headed by Michael Rhodin, who was previously senior vice president of IBMs software solutions group.

Under the Watson Group, IBM will offer the technology, which is delivered over the cloud and can power new consumer and enterprise apps, to businesses and industries as well as to consumers. IBM said it decided to establish the unit because of strong demand for cognitive computing. Watson will be deployed on Softlayer.

(Written with agency inputs)

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