Remedy Shares Plummet 34% on Worries Over IBM Deal
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Shares of help desk software maker Remedy Corp. fell 34% on Tuesday on concern that its earnings will be hurt by IBM Corp.’s acquisition of Software Artistry Inc.
Remedy shares plunged $11.31 to close at $21.56 in Nasdaq trading.
The Mountain View-based company, which helps firms monitor problems that employees have with their computers, has had an informal agreement with computer maker IBM in which Remedy’s programs were used in IBM consulting projects. IBM’s purchase of rival Software Artistry could hurt Remedy’s sales because IBM may begin promoting Software Artistry’s products instead of Remedy’s, analysts said.
Remedy “management doesn’t know the extent this has been beneficial in the past,” John Faig, an analyst at PaineWebber Inc., said of Remedy’s partnership with IBM. “Here’s a source of referrals that’s going away. If they can crank up business away from this informal relationship, then we won’t even notice this is happening.”
Calls to the company were not immediately returned.
IBM said Friday that it planned to buy Software Artistry for $24.50 a share, or $200 million, expanding its corporate software to compete with Computer Associates Inc.
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