Informatica paid $55 million in cash for Similarity Systems and said it will incorporate the firm's data quality technology into its PowerCenter data integration suite. Similarity Systems' tools enable the profiling, standardization, cleansing, matching and monitoring of data.
"Data quality is ranked by our customers as one of their top challenges within their broader data integration projects, such as legacy migration, application consolidation and data hubs," said Informatica chairman and CEO Sohaib Abbasi in a prepared statement.
Various recent surveys have ranked data quality as one of the major challenges facing business intelligence practitioners, along with software usability.
Earlier this month, Similarity Systems struck a partnership with business intelligence software company Cognos. Under the terms of that agreement, the firms said they'll make it possible to view Similarity Systems' data quality metrics via Cognos 8, the BI vendor's flagship software.
Similarity Systems delivers scorecards, metrics and reporting that help organizations continuously measure and improve data quality. The company's technology is specifically designed for data analysts and other business professionals. It can assist the management of data related to customers, products, finances, inventory, pricing and other types of information.
The Similarity Systems transaction will be dilutive to Informatica's financial performance in the first half of 2006, the company said, but is expected to boost earnings before amortization of intangibles and stock-based compensation beginning in the fourth quarter of 2006.
Also after market close, Informatica announced positive financial results for the fourth quarter of 2004. The company reported sales of $79.8 million for the period, up 33 percent over the fourth quarter of 2004. Earnings reached $13.6 million in the quarter, compared with a loss of $98.7 million a year earlier.
Informatica garnered 88 new customers in the fourth quarter, its highest number of new wins since 2001. Nine of those deals were valued at $1 million or more, Informatica said.
The strong earnings report marks a major performance turnaround for Informatica. The company's shares had jumped almost 13 percent by Friday's closing bell.