International Business Machines Corp. (NYSE:IBM), one of the pioneering computer big wigs, has revealed today that it will acquire Kenexa for $1.3 billion in cash. International Business Machines Corp. (NYSE:IBM) will pay Kenexa Corporation (NYSE:KNXA) shareholders $46 a share; this represents a 42 percent leap in comparison to the previous close last Friday.
Kenexa Corporation (NYSE:KNXA) , a recruitment software developer, operates on the social front and extends its services through the web; it’s all part of a supposed social business vertical. The software provided by Kenexa allows businesses to harness and manage talent through online social networking among other high-end tools.
Why pick Kenexa Corporation (NYSE:KNXA) ? Apparently, International Business Machines Corp. (NYSE:IBM) believes that social networking avails a good opportunity to tap into higher wave lengths of operations. Alistair Rennie, the general manager of the company’s social business division, shared his insight on the matter. “Every company, across every business operation, is looking to tap into the power of social networking to transform the way they work, collaborate and out innovate their competitors,” he said.
Rennie went on to add that IBM’s positioning was peerless, citing that the company had the ability to help clients glean real returns from their diversified social business investments.
By acquiring Kenexa, IBM has polished the luster on its fast growing suite of social products. Some of the notable social products in IBM’s stable include instant messaging solutions.
Tech industry leaning towards social
The Kenexa deal underscores the growing inclination towards social; a trait that has cut across the entire tech industry. This deal comes after Microsoft Corporation (NASDAQ:MSFT)’s highly publicized, $1.2 billion Yammer acquisition earlier in June.
The most interesting thing about this newly found trend is that most tech companies are settling for startups. This is with the exclusion of Apple, which although not official, was rumored to have been in some clandestine talks with Twitter some time back.
While moving towards the social front may enhance the profitability of big wig tech companies, it won’t pass by without stirring some movements in the social front. The fact that most companies are settling for startups poses a great risk to heavy weights like Facebook Inc (NASDAQ:FB). It actually underscores the growing incertitude towards Facebook Inc (NASDAQ:FB). The social network’s corporate market is shriveling by the day, and high-end clients have begun settling for smaller companies that extend a fresher set of ideas.
Mark Zuckerberg, Facebook Inc (NASDAQ:FB) CEO, should once again try to push forward with an unprecedented breakthrough, if he wants to elude the overwhelming bearish sentiment that his company currently attracts in the corporate market.
Others think this might be a move towards something else. Stiflel Nicholas analysts ask Is IBM quietly entering the app space? While IBM positions the KNXA acquisition as a social and big data play, we believe this transaction, coupled with its recent purchase of DemandTec, may signal a greater willingness by IBM to enter the “modern” application space where the ability to leverage data for predictive analytics is front and center.