IBM to Acquire Micromuse Inc.

Extends IBM’s Ability to Help Customers Manage Complex IT Systems Carrying Real-Time Data, Voice and Video

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ARMONK, NY and SAN FRANCISCO, CA - 21 Dec 2005:

IBM and Micromuse Inc. (Nasdaq: MUSE) today announced the two companies have entered into a definitive agreement for IBM to acquire the equity of Micromuse Inc., a publicly held company based in San Francisco, in an all-cash transaction at a price of approximately $865 million, or $10 per share.  The acquisition is subject to Micromuse shareholder and regulatory approvals and other customary closing conditions. It is expected to close in the first quarter of the 2006 calendar year.

Micromuse is a leading provider of network management software used by banks, telecommunications carriers, governments, retailers and other organizations to monitor and manage their sophisticated technology infrastructures. The software helps customers manage increasingly complex IT systems that support the proliferation of voice and video traffic, in addition to data, due to the growing adoption of voice over IP (VoIP), audio and video services delivered over the Internet. The combination of Micromuse’s software and IBM's IT service management technology will provide customers with a comprehensive approach for reducing the complexity of their IT environments, lowering operational costs, and addressing  compliance mandates. 

“Today's networks are no longer just pipelines of data -- customers are incorporating data, voice and video into their business operations at an astounding pace," said Al Zollar, General Manager, IBM Tivoli software.  "The proliferation of Internet telephony and video-on-demand are not only changing the way people use information technology, but also how companies manage it.  The addition of new capabilities raises the complexity of today’s networks, which require real-time network and service management.  The combination of Micromuse and IBM Tivoli will help companies manage these sophisticated IT environments, deploy new business service management solutions, and deliver new network-based services to customers, employees and trading partners." 

The delivery of network-based services -- such as data, voice and video -- over the Internet in real time is creating new avenues for content, such as streaming music videos delivered to cell phones.  It can also enable workers to use mobile devices to access their company’s network, tap into a live video feed of a sales conference, or pose a question to a group via phone or instant message. 

Micromuse technology also helps companies quickly diagnose the performance of their IT environments, allowing them to automatically analyze and resolve network outages and performance problems, such as system overloads caused by spikes in web traffic. Micromuse software also complements IBM’s security management software by alerting IT staff about attempted network breaches by hackers and other unauthorized users.  These capabilities will extend IBM's self-managing autonomic technologies to the network.  

Micromuse has more than 1,800 customers worldwide, including America Online, British Telecom, Cox Communications, Deutsche Telecom, eTrade, Fidelity Investments Services Ltd., Invesco Asset Management Plc., KeyBank, NCR Corporation, NTT, Orbitz, Shanghai Telecom, State of Michigan, Swisscom Mobile, Telecom Italia, U.S. Securities and Exchange Commission, Verizon, and Virgin Atlantic.

The acquisition will strengthen the IT service management capabilities of IBM's Tivoli software portfolio, which has produced double-digit revenue growth for the first three quarters of 2005.  Micromuse also grew rapidly this year (fiscal year ended September 2005) with a reported 10 percent year-to-year revenue increase, to $160.8 million. 

"Network management is an essential element of IT service management, and Micromuse offers world-class technology and expertise to its customers and business partners,” said Lloyd Carney, Chairman and Chief Executive Officer, Micromuse.  “IBM and Micromuse are dedicated to building software solutions that meet the demands of the industry’s most complex IT infrastructures.  Together, we will help customers efficiently and effectively manage IT services in support of their business goals.”

Following completion of the acquisition, IBM intends to: 

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