IBM Acquires XIV

IBM (NYSE: IBM) today announced it has acquired XIV, a privately held storage technology company based in Tel Aviv, Israel. XIV, its technologies and employees, will become part of the IBM System Storage business unit of the IBM Systems and Technology Group. Financial terms of the acquisition are not being disclosed.

"The acquisition of XIV will further strengthen the IBM infrastructure portfolio long term and put IBM in the best position to address emerging storage opportunities like Web 2.0 applications, digital archives and digital media," said Andy Monshaw, general manager, IBM System Storage. "The ability for almost anyone to create digital content at any time has accelerated the need for a whole new way of applying infrastructure solutions to the new world of digital information. IBM's goal is to provide the leading technologies and solutions at every layer of the data center -- storage, servers, software and services -- to address these new realities IT customers face."

To address the new requirements associated with next generation digital content, IBM chose XIV and its NEXTRA™ architecture for its ability to scale dynamically, heal itself in the event of failure, and self-tune for optimum performance, all while eliminating the significant management burden typically associated with rapid growth environments. The architecture also is designed to automatically optimize resource utilization of all the components within the system, which can allow for easier management and configuration and improved performance and data availability.

"We are pleased to become a significant part of the IBM family, allowing for our unique storage architecture, our engineers and our storage industry experience to be part of IBM's overall storage business," said Moshe Yanai, chairman, XIV. "We believe the level of technological innovation achieved by our development team is unparalleled in the storage industry. Combining our storage architectural advancements with IBM's world-wide research, sales, service, manufacturing, and distribution capabilities will provide us with the ability to have these technologies tackle the emerging Web 2.0 technology needs and reach every corner of the world."

The NEXTRA architecture has been in production for more than two years, with more than four petabytes of capacity being used by customers today.

IBM's acquisition of XIV supports the IBM growth strategy and capital allocation model, as part of the company's overall objective for earnings-per-share growth through 2010.

Through its deep industry expertise, patent leadership, research and innovation, IBM has long been the leader in providing customers with technology solutions that help them deliver and utilize information effectively. With industry recognized leadership in storage and server hardware and software, and through the recent strategic acquisitions of Softek, FileNet and NovusCG, IBM has grown its storage services offerings and presents customers with strategic solutions to deliver integrated software, hardware, services and research in standardized offerings that can be used by customers of all sizes to help them transform their businesses.

About XIV

For more information about XIV, please visit http://www.xivstorage.com.

About IBM

For more information about IBM System Storage, please visit http://www.ibm.com/storage.

IBM to Acquire Cognos to Accelerate Information on Demand Business Initiative

IBM (NYSE: IBM) and Cognos® (NASDAQ: COGN) (TSX: CSN) today announced that the two companies have entered into a definitive agreement for IBM to acquire Cognos, a publicly-held company based in Ottawa, Ontario, Canada, in an all-cash transaction at a price of approximately $5 billion USD or $58 USD per share, with a net transaction value of $4.9 billion USD. The acquisition is subject to Cognos shareholder approval, regulatory approvals and other customary closing conditions. It is expected to close in the first quarter of 2008.

The acquisition of Cognos supports IBM's Information on Demand strategy, a cross-company initiative announced on February 16, 2006 that combines IBM's strength in information integration, content and data management and business consulting services to unlock the business value of information. Integrating Cognos, the 23rd IBM acquisition in support of its Information on Demand strategy, will enable new business insights to be delivered to a broader set of people across an organization, beyond the traditional users of business intelligence.

IBM said the acquisition fits squarely within both its acquisition strategy and capital allocation model, and that it will contribute to the achievement of the company’s objective for earnings-per-share growth through 2010.

“Customers are demanding complete solutions, not piece parts, to enable real-time decision making," said Steve Mills, senior vice president and group executive, IBM Software Group. "IBM has been providing Business Intelligence solutions for decades. Our broad set of capabilities – from data warehousing to information integration and analytics – together with Cognos, position us well for the changing Business Intelligence and Performance Management industry. We chose Cognos because of its industry-leading technology that is based on open standards, which complements IBM's Service Oriented Architecture strategy.”

Together, IBM and Cognos will become the leading provider of technology and services for Business Intelligence (BI) and Performance Management, delivering the industry’s most complete, open standards-based platform with the broadest range of expertise to help companies expand the value of their information, optimize their business processes and maximize performance across their enterprises.

The acquisition of Cognos accelerates IBM’s global Information on Demand initiative to unlock the business value of information for our customers. IBM will provide broader reach for Cognos solutions across multiple industries and geographies with a more complete set of offerings, including consulting services, hardware, and other middleware software.

Cognos provides the only complete BI and performance management platform, fully integrated on an open-standards-based service oriented architecture (SOA), and has a strong history of supporting heterogeneous application environments, consistent with IBM’s approach. With Cognos, customers can turn data into actionable insight for coordinated, information-driven decision-making to improve overall performance. Cognos will also extend IBM’s reach further into the CFO office with powerful financial planning and consolidation capabilities.

“This is an exciting combination for our customers, partners, and employees. It provides us with the ability to expand our vision as the leading BI and Performance Management provider,” said Rob Ashe, president and chief executive officer, Cognos. “IBM is a perfect complement to our strategy, with minimal overlap in products, a broad range of technology synergies, and the resources, reach, and world-class services to accelerate this vision. Furthermore, this combination allows Cognos customers to leverage a broader set of solutions from IBM to advance their information management driven initiatives.”

Together, IBM and Cognos will expand IBM’s ability to provide customers with the right information they need when they need it, to optimize operational performance, and to quickly respond to changing market demands. The combination of IBM’s information management technology and Cognos will also help organizations discover new ways to use trusted information spread across their enterprises to identify new business opportunities and significantly reduce the expense and time required to address industry-specific business challenges.

Following completion of the acquisition, IBM intends to integrate Cognos as a group within IBM's Information Management Software division, focused on Business Intelligence and Performance Management. IBM also will appoint current Cognos President and CEO, Rob Ashe, to lead the group, reporting directly to General Manager, Ambuj Goyal.

Cognos has approximately 4,000 employees worldwide and serves more than 25,000 customers. IBM and Cognos have partnered for more than 15 years, with extensive technical integrations and eight pre-integrated joint solutions already supporting many joint customers, such as New York City Police Department, Blue Cross and Blue Shield of Tennessee, Canadian Tire, MetLife, and Bayer UK.

Other strategic acquisitions in support of IBM’s Information on Demand initiative include Princeton Softech (data archiving and compliance), FileNet (enterprise content management), Ascential Software (information integration), DataMirror (changed data capture), SRD (entity analytics), Trigo (product information management), DWL (customer information management) and Alphablox (analytics).

More information on IBM’s acquisition of Cognos is available on IBM’s investor Web site at: http://www.ibm.com/investor/viewpoint/ircorner/2007/07-11-12-1.phtml.

About IBM

For more information about IBM’s Information on Demand strategy, go to: http://www.ibm.com/software/data/information-on-demand/ . Additional details about the combination of IBM and Cognos are available at: http://www.ibm.com/software/data/info/cognos

About Cognos

For more information, visit the Cognos Web site at: http://www.cognos.com/

Information About the Transaction

The transaction will be completed through a plan of arrangement, which will require the approval of shareholders representing two thirds of the shares cast. Shareholders will be asked to vote on the transaction at a special meeting, the details of which will be announced in due course.

The transaction has been unanimously approved by the board of directors of Cognos following delivery of a fairness opinion, which will be included in a proxy circular to be prepared and mailed to Cognos shareholders over the coming weeks providing shareholders with important information about the transaction. A material change report, which provides more details on the transaction, will be filed with the Canadian provincial securities regulatory authorities and with the U.S. Securities and Exchange Commission and will be available at www.sedar.com and at www.sec.gov.

IBM to Acquire Watchfire to Help Customers Guard Against Online Security Attacks and Compliance Breaches

IBM (NYSE: IBM) today announced it has entered into an agreement to acquire Watchfire Corporation, a privately held security and compliance testing software company based in Waltham, Massachusetts. The acquisition is subject to customary regulatory approvals and is expected to close in the third quarter of 2007. Financial details were not disclosed.

Online security and privacy incidents are on the rise which can result in loss of customer trust, costly technology and business remedies and often legal battles. According to a 2005 CSI/FBI Survey, internal security attacks cost U.S. businesses $400 billion per year. Watchfire technology, together with IBM, can help customers reduce these security risks and the associated costs to their bottom line.

Watchfire technology will extend IBM's governance and risk management strategy, with broad security and compliance capabilities integrated into the software development lifecycle. Watchfire with IBM Rational software will help customers integrate web application security and compliance early on and throughout the software development process. As a result, customers will now be able to define, test and track the compliance of their applications with security, legal and corporate requirements.

"Security breaches and lack of compliance with industry and government regulations can topple business integrity and customer trust," said Dr. Danny Sabbah, general manager, IBM Rational software. "Watchfire is a recognized industry leader in the security and compliance market that will further strengthen our ability to help customers mitigate risk by integrating security, quality testing and compliance testing requirements early in the software development process -- before vulnerabilities are exposed."

Watchfire is a leading provider of web application security and compliance testing solutions. IBM Rational software provides clients with comprehensive software quality management solutions, including the ability to perform functional and performance tests while developing software. With the addition of Watchfire technology, customers will now be able to include security, compliance and quality testing as part of their web application development, which will ensure the business integrity of their applications before they go live. Watchfire technology will also complement existing IBM Tivoli identity, access and compliance management software offerings and ISS by extending security and compliance testing as an integrated element of the application development lifecycle.

IBM's acquisition of Watchfire builds upon the existing relationship between the two companies. Founded in 1996, Watchfire is a Ready for IBM Rational software Business Partner, meaning Watchfire validated the integration of their offerings to the IBM Rational Software Delivery Platform. Watchfire has more than 800 customers in many industries around the globe, including but not limited to financial services, government, technology, pharmaceutical, energy and utilities, education, and manufacturing which rely on Watchfire to identify, report and help remediate security vulnerabilities.

"Web application attacks can expose high-value data such as personal information, customer records and corporate intellectual property, and these attacks are top-of-mind for companies worldwide," said Peter McKay, Watchfire President & CEO. "Watchfire technology will extend IBM's broad security and compliance product and services offerings to help customers address one of today's most critical and challenging security issues. In addition, Watchfire can seamlessly integrate into IBM's current offerings to provide a more comprehensive solution."

Watchfire's operations will become part of IBM's Rational software brand, which produced double-digit revenue growth in the first quarter of 2007.

For more information, please visit: www.ibm.com/rational

SEC Settles With IBM for Misleading Statements Regarding Stock Option Expenses

The Securities and Exchange Commission announced today a settled enforcement action against International Business Machines Corporation for making materially misleading statements in a chart concerning the impact that the company's decision to expense employee stock options would have on its first quarter 2005 (1Q05) and fiscal year 2005 (FY05) financial results. The misleading chart caused analysts to lower their earnings per share (EPS) estimates for the company.

Linda Chatman Thomsen, Director of the SEC's Division of Enforcement, said, "Information regarding a company's earnings is one of the most important factors that many investors consider in making an investment decision, and it is essential that the information companies provide be clear and accurate."

The Commission found that IBM provided the misleading information during an April 5, 2005 conference call with analysts. The call was simultaneously webcast, and a transcript and the accompanying exhibits were filed with the Commission in a Form 8-K. During the call, IBM announced that beginning in 1Q05 it would report stock options as an expense in its financial statements and advised analysts to adjust their earnings models to account for the change. At the time, IBM expected that its stock options expense for 1Q05 would have a $0.10 impact on first quarter EPS results and estimated a $0.39 impact on FY05 EPS results. However, IBM did not disclose this information. IBM included a misleading chart in its presentation which, to many analysts, conveyed that the EPS impact of IBM's stock options expense would be $0.14 for 1Q05 and $0.55 for FY05. After IBM's April 5 announcement, the majority of analysts reduced their EPS estimates by these amounts.

SEC Associate Director of Enforcement Scott W. Friestad said, "IBM misled investors by failing to disclose information that would have allowed them to accurately determine the impact that the company's decision to expense stock options would have on its financial results. The facts here are particularly troubling because the disclosure decision was driven, in part, by management's perception of how the news would be interpreted by analysts."

The Commission's Order finds that IBM did not disclose its expected stock options expense because it was concerned that analysts would add back to their EPS estimates any year-to-year reduction in the options expense instead of using the reduction to off-set an unrelated, previously-announced increased pension expense. According to the Order, management wanted to avoid this outcome because it would have increased the expected growth rate that analysts had set for IBM, which would have been difficult for the company to achieve because of the year-to-year increase in pension expense.

On April 14, 2005, IBM announced its 1Q05 financial results and disclosed earnings of $0.85 per share, which was $0.05 less than the amount that many analysts were expecting following the April 5 presentation. IBM also disclosed that its equity compensation expense was $0.10 per share for 1Q05, or $0.04 lower than what many analysts had understood IBM's April 5 misleading chart to have indicated it would be. IBM's stock price dropped $6.94 the next day, or over 8%, closing at $76.33.

The Commission found that IBM violated Section 13(a) of the Securities Exchange Act of 1934 and Rules 13a-11 and 12b-20 thereunder. Without admitting or denying the Commission's findings, IBM consented to the issuance of the Order, which requires IBM to cease and desist from committing or causing violations of these provisions.

IBM and Lehman Brothers jointly invest in Kingdee

IBM (NYSE: IBM) and Lehman Brothers (NYSE: LEH) announced that they are investing in Kingdee International Software Group Company Limited (Kingdee). Following completion of the investment, IBM and Lehman Brothers will each become a shareholder of approximately 3.85% of the issued share capital of Kingdee. Meanwhile, IBM and Kingdee International will form a global alliance to enhance the competitiveness of their clients in China and global markets, and help Kingdee International to become an international company and truly global software provider.


In October 2006, IBM and Lehman Brothers entered into an offshore business alliance with the aim to jointly invest in Chinese enterprises. This business alliance has been described and branded as "The China Investment Fund". As the first major investment by this alliance, the Kingdee transaction represents a cooperative initiative by IBM and Lehman Brothers to help domestic Chinese enterprises develop their management capabilities and grow into world-class corporations.

Since the formation of this business alliance last year, the "China Investment Fund" business alliance has focused on public and private, mid-stage and mature Chinese companies across various industry sectors. IBM and Lehman Brothers aim to help these Chinese companies expand their business and management capabilities by leveraging IBM’s business and operational insights and technology leadership in China, and Lehman Brothers’ global investment banking and private equity expertise and capability. As a leading ERP and E-Commerce solutions provider in the China market, Kingdee has developed into one of the fastest growing ISVs in the global software market. IBM and Lehman Brothers believe that this investment will also be a catalyst for the development of China’s local software industry.

Charles P. Wu, managing partner of China Investment Fund and IBM Greater China Group vice president said he was very pleased with the success of this collaboration. Since its inception, the "China Investment Fund" business alliance has generated a great deal of interest from Chinese enterprises due to its innovative investment approach. The initiative also reinforces IBM’s commitment to supporting the development of the Chinese market. The "China Investment Fund" business alliance should exert significant influence on future investments and business cooperation for IBM in China. Furthermore, this collaborative approach will become a key component of IBM’s China strategy. Wu also said, "IBM remains dedicated to being a reliable innovation partner with the Chinese government and Chinese enterprises. Today, a number of dynamic, mid-stage Chinese enterprises have the potential to become global corporations. As a globally integrated enterprise, we aim to assist them in expanding their business, exploring potential markets and achieving innovations, and to demonstrate IBM’s value as an enabler for their success."

Lehman Brothers has been a pioneer among global investment banks since establishing its presence in China and has launched many first-of-its-kind transactions in the market. Commenting on the first investment made by its business alliance with IBM, Chris Manning, managing director and head of Asia Private Equity, Lehman Brothers said, "China is an important market to Lehman Brothers and is an integral part of our global strategy to expand our franchise in Asia. This partnership with IBM aligns with the Firm’s commitment to offering innovative solutions to service our clients. Kingdee is a leader in China’s enterprise resources planning (ERP) industry, particularly among the small-and-medium-enterprises segment, which offers fast-growing and untapped growth opportunities. We are very excited about this investment opportunity as we are about our investment partnership with IBM in China."

Xu Shaochun, chairman of Kingdee, said, "Until now, Kingdee and IBM have already enjoyed almost ten years of collaboration. During this time, Kingdee has benefited greatly from IBM’s leading technology expertise and comprehensive business experience. As we seek enough capital to grow, this collaboration with the ‘China Investment Fund’ business alliance has further strengthened our relationship with IBM and added a new relationship with Lehman Brothers. We believe that this collaboration will bring more opportunities for us, adding value to our business and helping us to be more competitive in the global market."

Kingdee International and IBM also signed a MOU on global collaboration, mainly on various aspects like globalization and SOA, marketing/sales/channels/customers, consultation and application management services (AMS), and Software as a Service (SaaS).


About IBM
For further information on IBM, please visit www.ibm.com


About Lehman Brothers
Lehman Brothers, an innovator in global finance, serves the financial needs of corporations, governments and municipalities, institutional clients, and high net worth individuals worldwide. Founded in 1850, Lehman Brothers maintains leadership positions in equity and fixed income sales, trading and research, investment banking, private investment management, asset management and private equity. For further information about Lehman Brothers' services, products and recruitment opportunities, visit www.lehman.com


About Kingdee
For further information on Kingdee, please visit: http://www.kingdee.com/index.jsp

IBM and Switzerland's Banque Cantonale Vaudoise in $460 Million, 5-Year Services Agreement

Banque Cantonale Vaudoise, (BCV), one of Switzerland's top full-service banks, and IBM, (NYSE: IBM) have signed a $460 million, 5-year services agreement for IBM to transform BCV's Information Technology (IT) infrastructure.

The project supports the growth initiatives of the 162-year-old bank, which has expanded and diversified its business activities to become one of Switzerland's largest banking institutions. The agreement allows the bank to concentrate on its core competencies of retail and institutional banking while benefiting from IBM's leadership in banking application consulting and hosting.

In terms of the agreement, the business of BCV's IT services provider, Unicible, and Unicible's resources will transfer to IBM. Unicible is the largest banking solution IT provider in Suisse romande, and the transfer includes about 330 staff. IBM will establish an IT Banking Competence Centre in Lausanne, focusing on banking applications consulting and banking application hosting. The aim is to transfer Unicible from a captive and proprietary service provider to a multi-platform banking competence centre in Lausanne. In future, the centre will provide technology services, consulting services and managed business services to banking groups in addition to BCV.

Alexandre Zeller, CEO BCV, said: "With IBM as a partner we can focus on our core activities and offer the best possible services to our clients."

The contract is one of IBM Switzerland's largest ever services agreements and further strengthens IBM's position as a leader in the Swiss banking sector.

"With this agreement we are able to help BCV offer better service to their customers and help them focus on their success," said Daniel Ruethemann, Country General Manager, IBM Switzerland. "With the new IT Banking Competence Centre, IBM will provide best-in-class technology, consulting and managed business services to BCV and other retail and private banks."

Implementation of the agreement is planned for June 2007.