IBM sells Weather Company assets to Francisco Partners

IBM sells Weather Company assets to Francisco Partners

Image credits: Chris J. Ratcliffe/Bloomberg/Getty Images

After rumors that it was exploring selling its weather business as part of a move to streamline operations, IBM says it has found a buyer for The Weather Company, the weather forecasting and information company it acquired in 2015.

Private equity firm Francisco Partners has signed a definitive agreement to acquire the assets of The Weather Company from IBM, the companies announced today. Terms of the deal were not disclosed, except that it is expected to close by the end of the first quarter of 2024, subject of course to regulatory approvals and customary closing conditions.

As part of the acquisition, Francisco Partners will acquire The Weather Company's direct-to-consumer applications, including The Weather Channel mobile, Weather.com, Weather Underground and Storm Radar, as well as The Weather Company's enterprise offerings for broadcast, media, aviation, ad technology and “data solutions.” In addition, The Weather Company will provide its scientific forecasting services to Francisco Partners, IBM says, in addition to its technology platform.

As for IBM, it will retain The Weather Channel's sustainability programs after the purchase – specifically its “Environmental Intelligence Group” for environmental, social and governance reporting. It will continue to use The Weather Company's weather data in “climate-related use cases” such as the geospatial AI model it offers at Watsonx, its AI and data platform.

“We are proud of what the Weather Company team has accomplished with IBM, and are confident that the best path forward is to become an independent company that leverages Francisco Partners' expanded investment, dedication and expertise,” said Rob Thomas, senior vice president of software and chief commercial officer, IBM. In a press release. “Over the past few years, we have evolved IBM into a hybrid cloud and AI company. We regularly review our portfolio to ensure our business areas are core to that strategy, and today's news reflects our continued focus on these two transformative technologies.

When IBM bought The Weather Company for $2 billion, it pitched the move as a long-term flagship of analytics, big data and the Internet of Things. For your information, over the course of nearly eight years, IBM has launched a number of new apps and services in addition to The Weather Company features, including hyperlocal forecasts, COVID-19 maps, and improved weather forecasts that leverage data from airplanes and smartphones.

Under IBM, The Weather Company, founded in 1980 as The Weather Channel, has grown to serve an average of more than 415 million people each month through its consumer-facing properties and more than 2,000 businesses through its enterprise products.

But IBM, which in June spent $4.6 billion to acquire Apptio, a business value and spend management platform, is under pressure to turn around its finances.

In its most recent fiscal quarter, IBM had revenue of about $15.5 billion, down 0.4% from its results a year ago. The company's mainframe business alone declined by 30%, while its infrastructure business fell to $3.6 billion, a decrease of 14.6%.

Facing its lowest stock price in more than 20 years, IBM is laying off employees, and in March announced plans to cut its headcount by 3,900 people — most of them concentrated in its Watson artificial intelligence division and infrastructure businesses run by Kendrell. IBM also recently sold Watson Health to Francisco Partners, a deal said to be worth $1 billion. (Some reports indicate that IBM was seeking a similar price to The Weather Company.)

Francisco Partners sees a bright future for The Weather Company, saying it plans to increase investment and resources in the platform to take it “beyond just forecasting” with “new tools and experiences” focused on health and well-being. On the commercial side, The Weather Company will offer “more actionable insights,” Francisco Partners says, along with “real-time experiences” aimed at advertising and subscription media companies.

“With weather becoming increasingly volatile, The Weather Company's unique suite of consumer, media and industry-specific products provide critical, data-driven weather insights to individuals and businesses around the world,” said Alan Nee, partner at Francisco Partners. . Canned statement. “We are excited to partner with the management team to grow The Weather Company’s portfolio of strong technology offerings and deliver a great product experience to its customers.”

There's no denying that weather forecasting is a lucrative business. A 2012 National Weather Service survey estimated the total value of weather data that could be captured across all industries in the United States at $13 billion. Meanwhile, the value of the private weather forecasting market is expected to grow from $1.76 billion in 2022 to $4.18 billion in 2030, according to a report by Verified Market Research.



(tags for translation) Acquisitions

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