IBM looks to make more from less

Contact Scott Denne

IBM is selling its customer-care BPO services unit for $505m to SYNNEX in a deal that single-handedly erases revenue contributions brought by companies it has acquired this year. In other words, IBM is selling more revenue than it’s bought this year. (Specifically, the division that Big Blue just divested generated $1.2bn in sales.)

The divestiture, which is becoming increasingly popular throughout the tech industry, comes as IBM chases its stated goal of earning $20 per share by 2015. In addition to share buybacks and focusing on higher-margin businesses, another way it could get there is by shedding less profitable assets. The BPO services assets that SYNNEX is picking up were running on just about a 10% EBITDA margin. For comparison, the companies it has acquired this year were almost certainly promising much higher profitability potential.

That has resulted in a very lopsided deal flow at IBM. Since the start of 2012, Big Blue has sold off eight business units. In the entire decade before, the company did only 16 divestitures.

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