IBM to Purchase Kenexa

Technology giant International Business Machines

revealed Monday that it is set to acquire software-as-a-service provider Kenexa

for roughly $1.3 billion, or $46 per share. That is 42 percent above Friday's closing price. Kenexa has been as a desirable stock for some time by analysts due to the fact that it has experienced five-year annual revenue growth of 15.9 percent and one-year revenue growth of 32.1 percent. The company has a gross margin of 60 percent, and a debt-to-equity ratio of just 12 percent. According to

, Kenexa supports more than 8,900 customers across a variety of industries, including financial services, pharmaceuticals, retail and consumer, including more than half of the Fortune 500. The company has approximately 2,800 employees across 21 countries. Alistair Rennie, general manager of I.B.M.'s social business division said in a statement that, “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. I.B.M. is uniquely positioned to help clients generate real returns from their social business investments, while helping them gain intelligence into the data being generated in these networks to be more competitive in their markets.” IBM believes that Kenexa will bring a combination of Cloud-based technology and consulting services, and that is what it finds attractive as it looks to “tap into social networking.” These are interesting times, as the old computing giants like IBM are playing catch-up when it comes to technologies like cloud computing. Nobody wants to be seen to be a dinosaur, even if the value of some of the tools is perceived as minimal. In this case, the purchase – even at that price – looks to be a very smart move. With Kenexa in the IBM arsenal, the company leadership will be well-placed to help and even encourage its clients dive into the social networking world. Those who hear “social networking” and immediately think “Facebook”

and, in turn, “frivolous activity” will be nudged towards the usefulness of social networking as a business tool. Social business technology is a buzz phrase of the moment, and it only looks like it is going to expand across the business world. Thanks to the acquisition of Kenexa, IBM have got a jump on much of the competition. On Monday morning, International Business Machines traded at about $197, down roughly 0.3 percent.