IBM acquires Informix software unit for $1 billion

IBM has announced it has agreed to take over one of Informix’s two database
software business units for $1 billion in cash. The group, based in Menlo Park
in Silicon Valley, makes software used in the retail and financial services
markets. The products are regarded as faster and more powerful than competing
offerings from Oracle.

Informix customers include Verizon Communications and Sears, Roebuck &
Co. The deal will allow IBM to give Oracle a run for the money in
telecommunications, retail, health-care and government market sectors where
Oracle has been strong contender.

IBM’s database sales have been growing at a rate of around 35 per cent a
year. Oracle’s database revenues in contrast grew just 6 per cent in the first
quarter of 2000. The two companies now each control about 30 per cent of the
market.

But with the Informix software, IBM has new ammunition to aim at Oracle.
"Oracle is the big player. We see this as adding a lot to our clout in the
marketplace," said Steve Mills, group vice president for software at IBM.

Oracle CEO Larry Ellison commented he doubted whether the Informix purchase
would help IBM gain customers. Oracle, he said has talked to Informix customers
to determine if it would make sense to buy Informix and concluded such a
purchase wouldn't help Oracle sales.

"The suggestion is that IBM bought 100,000 customers and they're on the way
to eclipsing Oracle. We have a billion in cash. We could have bought Informix
too. We've never really been interested in buying Informix."

Meanwhile, Informix will be left with only the Ascential line of software
that is used for extracting and combining data from sources such as customer and
inventory lists. Ironically, the company had announced plans to spin off the
Ascential product group into a separate company.

The Ascential unit has annual sales of about $120 million. The unit did
report a loss and Informix does not expect it to become profitable until the
fourth quarter of this year. Informix will be renamed Ascential Software.

As many as 2,300 employees will join IBM. As part of the deal, IBM has agreed
to market business software that uses Ascential products