International Business Machines (NYSE:IBM) is selling off its weather forecasting business, including The Weather Channel mobile app and websites, Weather.com, Weather Underground, and Storm Radar. These assets are being acquired by global private equity player Francisco Partners for an undisclosed sum. IBM’s decision to offload these assets aligns with its strategy to streamline operations and focus on more lucrative units involving software, cloud services, and artificial intelligence (AI).
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Terms of the Deal
Per the terms, IBM will retain access to the business’s weather data, including its Environmental Intelligence Suite (EIS), which is used in AI models sold to enterprise clients. That particular weather data is trained on NASA’s satellite data and helps in analyzing ESG data, predicting crop yields, and monitoring natural disasters, among others. EIS is also a part of IBM’s AI and data platform, Watsonx, which has a large range of applications. The release of Watsonx is scheduled for the third quarter of the current year.
Franciso Partners will also take over the enterprise offerings related to the Weather Channel’s broadcast, media aviation, advertising technology, and data solutions for other emerging industries.
The transaction is expected to close by April 2024, subject to certain regulatory approvals. As per prior reports, the deal is estimated to fetch over $1 billion.
Is IBM a Buy, Sell, or Hold, as per Analysts?
With three Buys, six Holds, and one Sell rating, IBM stock has a Hold consensus rating on TipRanks. The average International Business Machines price forecast of $143 implies 1.1% upside potential from current levels. Meanwhile, IBM stock has gained 3.8% so far this year.
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