ABB Strengthens Software Portfolio - Analyst Blog

Recently, ABB Ltd. (ABB) entered into an agreement to acquire a US based privately owned specialist software provider, Insert Key Solutions (IKS). ABB will include the solutions from IKS to that of Ventyx software portfolio, acquired by the company in May 2010. The IKS portfolio matches with ABB's power industry solutions.

The software solutions of IKS focus on improving work process, enhancing the dependability of equipment, increasing the performance in power generation plants, and improving transmission and distribution networks. With an employee strength of 50, IKS serves customers in the thermal and nuclear power sectors.

Ventyx provides business solutions (like enterprise software, energy markets data and professional services) to global energy, utility, communications, and other asset-intensive organizations. The addition of software solutions from IKS to Ventyx enhances ABB's software product offering, creating a complete solution for asset and work management, maintenance optimization, and equipment reliability.

ABB Ltd. is also engaged in the acquisition of Baldor Electric Company (BEZ), valued at $4.2 billion, and expects to close it in the first quarter of 2011. The inclusion of Baldor's strong NEMA motors product line to ABB's product portfolio and leverage from Baldor's leading market position in industrial motors will aid ABB to overcome the loopholes in its automation portfolio in North America. ABB also benefits from Baldor's expanding and lucrative mechanical power transmission business.

ABB Ltd.'s power and automation technologies offer a solution for sustainable development, thus helping to shield the world's resources. The company has a number of technologies for the solar power industry and also a growing installed base. ABB Ltd. has witnessed improving signs in late-cycle power, with some recent large contracts.

However, ABB Ltd.'s results are likely to be adversely affected by macroeconomic weakness as more than 80% of the company's orders are derived from outside the US.  A major competitor of ABB Ltd. is Siemens AG (SI).

Based in Zurich, Switzerland, ABB Ltd. is a power and automation technology company. The company operates in five segments: Power Products and Power Systems supply products and complete Transmission and Distribution (T&D) solutions to utility and industrial customers.

Discrete Automation & Motion, Low-Voltage Products and Process Automation supply products, systems and solutions to customers across nearly all segments of the process and manufacturing industries, as well as specialist end markets, such as marine and utility. ABB Ltd. operates in approximately 100 countries and structured its global organization into five regions, Europe, Americas, Asia, the Middle East, and Africa.

We have a Zacks #2 Rank (short-term Buy recommendation) on ABB Ltd.