IBM adds a software maker

Article Excerpt

IBM $127.41 (New York symbol IBM; Shares outstanding: 1.3 billion; Market cap: $163.4 billion; SI Rating: Above Average; Dividend yield: 2.0%) continues to expand its business-software operations. That’s because it earns higher profits from selling software and computer-management services than selling mainframe computers. The company recently agreed to buy Sterling Commerce from AT&T. Ohio-based Sterling makes software that helps automate and streamline transactions between businesses, such as buying raw materials and replenishing inventory. Sterling has over 18,000 clients. The sale will close later this year. IBM is paying $1.4 billion for Sterling. To put this figure in context, IBM earned $2.6 billion, or $1.97 a share, in the three months ended March 31, 2010. IBM is still a buy. buy…