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Why Is IBM Buying The Weather Company?

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Why Is IBM Buying The Weather Company?

  • International Business Machines Corp. (NYSE: IBM) has announced the acquisition of a large amount of assets from The Weather Co.
  • IBM plans to use its artificial intelligence computing system, Watson, to analyze its newly acquired data.
  • IBM’s stock is trading up modestly following the news.
  • IBM has announced that the company has acquired The Weather Co.’s B2B, mobile- and cloud-based web assets.

    The deal includes WSI, weather.com, Weather Underground and The Weather Company brand, but not The Weather Channel. The Weather Co.’s app is the fourth most-used mobile app in the United States and receives 26 billion daily inquiries.

    Unleashing Watson

    IBM plans to use its artificially intelligent computer system, Watson, to analyze its newly acquired Weather Co. data and potentially make some groundbreaking strides in understanding and predicting weather.

    Related Link: IBM's SEC Notice Isn't Changing Cantor Analyst's View

    “Upon closing this deal, The Weather Company will continue to be able to help improve the precision of weather forecasts and further deepen IBM’s Watson IoT capabilities by enabling the integration of global atmosphere and weather insights with enterprise information to create disruptive industry solutions that optimize decision-making,” Weather Company CEO David Kennedy said in a statement.

    The Goals

    Despite the computational advances in modern technology, weather forecasting has plenty of room for improvement. Hundreds of thousands of people around the world suffer weather-related deaths each year, and one of IBM’s primary goals will be to better predict when people’s lives will be at risk.

    Of course, there is also a major financial benefit to understanding weather patterns, including the ability for companies to optimize operations that could be affected by weather, such as shipping schedules.

    Market Reacts

    The financial terms of the deal have not been disclosed, but the market seems to like the acquisition. IBM’s shares are trading up 1.8 percent on Wednesday following the news.

    Disclosure: The author holds no position in the stocks mentioned.

    Image Credit: Public Domain

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