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IBM Closes Acquisition of Red Hat for $34B

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Re: IBM Closes Acquisition of Red Hat for $34B

#131

Post by mixmastamyk »

Zigurd wrote: post #65
giancarlostoro wrote: post #43

Earlier quoted context omitted.

Right but if you dont want to see that 34B disappear into nothing you dont want to disregard Red Hats feedback. I hope they just ensure Red Hat gets resources they need and step back. Pretty sure Microsoft is doing that with GitHub to a reasonable extent. Seems to me now that GitHub has more resources they can do much more than they could prior.

Squandering $multibillion investments into industry crown jewels is par for the course. As you point out Microsoft may have learned to not screw up GitHub, but the price of tuition was pretty high: $7-$10 billion for buying and destroying Nokia.

Is it the same class of leadership, or didn't they move on already?

Re: IBM Closes Acquisition of Red Hat for $34B

#133

Post by sgc »

magduf wrote: post #77
abvr wrote: post #54

Earlier quoted context omitted.

That I feel is just hyperbole, too many people tend to think this deal is some kid of death warrant to Red Hat, but in reality it is only going to strengthen it by adding more and providing support, both financial and managerial to any dearth of resources that may come around ope source companies, that is if IBM can keep their hands out of the technology and management of Red Hat. I think and hope they will be wise a…

>I think and hope they will be wise about handling things and learn from companies like Oracle who are now infamous for obliterating good technology. That's the problem with your thinking and people like you in this thread: you're entirely banking on faith that IBM won't ruin RH, even when you cite a great example here about Oracle making similar acquisitions and running them into the ground. Seriously, what makes yo…

There is little reason to compare IBM to Oracle, they have a very long history of their own acquisitions. I make no claim to understand what most of these are or how they have fared, but the list is public: https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitio...

Re: IBM Closes Acquisition of Red Hat for $34B

#134

Post by magashna »

bloopernova wrote: post #68
bmicklea wrote: post #34

Earlier quoted context omitted.

I respectfully disagree - I'm a Red Hatter so you can take that for what it's worth. To me the 34B buys IBM the real estate in the open hybrid cloud market which Red Hat has built up in the last 5 years. That is part of a large and rapidly growing market. If IBM interferes with Red Hat they will likely squander the value of what we've built. If they foster what Red Hat did to win that critical ground then their 34B c…

I certainly don't want to argue or appear confrontational, but wanted to ask you this: Have there ever been any situations where the acquisition of a smaller company by a larger one has resulted in the smaller company remaining independent? Or has there been any positives for companies like Red Hat when they get bought? Usually I hear or read the positive-yet-bland press release talking about how wonderful this is, a…

Microsoft seems to be doing the acquisition game right. All their recent purchases of indie video game studios have been well met, but that's most likely because of the leadership of Phil Spencer

Re: IBM Closes Acquisition of Red Hat for $34B

#135

Post by iamnotacrook »

GuiA wrote: post #118
topkai22 wrote: post #99

Earlier quoted context omitted.

Pixar / Disney Marvel / Disney Facebook / Instagram EBay/PayPal Exxon/Mobil Massive numbers of banking / pharma/ industrial mergers. I will agree though that I can't think of a tech sector merger at this scale that worked out really well. They seem to work best at the sub $2B level. Although LinkedIn/Microsoft is looking OK.

Are we talking about financial success, or making quality products? I get that shareholders care about the former, but as hackers we should care about the latter. Pixar movies have become crappy sequels made to sell toys. Instagram has become an ad infested product that tries to have every feature, resulting in a confused mess. Exxon/Mobil is one of the worst things that could have happened to the planet. eBay/PayPal…

"Pixar movies have become crappy sequels made to sell toys."

Not really. Most of what they do isn't sequels, and the ones they do are great. I saw Toy Story in the cinema and loved it. My daughter just saw Toy Story 4 in the cinema and loved it. So...financially successful, and people love the movies - not sure how this is a good example, to be honest (unless the metric is "I don't like it", of course...).

Re: IBM Closes Acquisition of Red Hat for $34B

#136

Post by colinmhayes »

coliveira wrote: post #107
tontonius wrote: post #84

So IBM buys Red Hat for $34B, of which $20B are borrowed monies. The debt is priced at 1.05 percentage points above Treasury yield rate [1] which would be somewhere around 3.5% which puts interest on bond debt at ~$700m every year. Now consider that Red Hat had a net income of $433m. Even if they reach $500 this year, Big Blue will still be $200m short, every year. At the moment, IBM is trading down at -0.5% on an ot…

But IBM bought RH only because they believed that the company has growth ahead. If it grows a little more than 1% a year (which should be easy) that will be enough to break even. I think that was a smart move by IBM.

You are forgetting about the opportunity cost of $34 billion.

Re: IBM Closes Acquisition of Red Hat for $34B

#137

Post by jedimastert »

iNate2000 wrote: post #127
jedimastert wrote: post #110

Earlier quoted context omitted.

I like your analysis. One thing that may be missing is how much money flows between them.

Like, existing deals, you mean?

Yeah, like if there's a contract between them or a regular amount of spending, that's an amount of money that IBM's saving each year, but that's also money that RedHat won't be earning each year. I don't know how important, percentage-wise, that number would be for either side. I imagine any amount of money would be a far bigger deal for RedHat than IBM.

Re: IBM Closes Acquisition of Red Hat for $34B

#138

Post by chr15p »

ubermonkey wrote: post #76
bmicklea wrote: post #32

Earlier quoted context omitted.

Red Hat's business model and open culture isn't changing. We will remain independent and I look at this as an opportunity for more people to engage with our stellar support and field teams. For some context you can read the email our CEO sent out to the whole company today: https://www.redhat.com/en/blog/jim-whitehurst-email-red-hatt...

"Red Hat's business model and open culture isn't changing. We will remain independent " Oh, man, wouldn't it be pretty to think so? In all seriousness, this is an INSANELY naive statement. It doesn't matter what IBM says, and it matters less what the Red Hat CEO says. You got bought. They can, and will, do whatever they want, regardless of what lip service they pay to independence or preserving culture or whatever.

They've just spent $34billion for what is essentially a culture and a customer base (all the software is open source, and the building are leased), so yes they absolutely can do whatever they want but burning it all to the ground is going to cause some interesting questions about exactly how that increased shareholder value. It could all fall apart but IBM management have a massive incentive to make it work.

Re: IBM Closes Acquisition of Red Hat for $34B

#140

Post by stirfrykitty »

bitwize wrote: post #132

IBM basically has control of all of Linux now. They've gotta love that sweet, sweet strategic leverage over the entire Web and cloud ecosystem.

There is a lot of truth to this. Since Fedora is the upstream for Red Hat, and IBM historically kill off anything not making a profit, how long before this happens? I wonder if they'll split the two?

Red Hat does "control" a disproportionate amount of Linux development. Everything is also now basically dependent on systemd.

I'm seeing more and more IT guys I know move over to Free/OpenBSD because they don't like the direction Linux is taking. While Linux is only a kernel, the entire userland is basically dependent on systemd.

Linux has become what it hated in Windows. A massive, bloated mess. I've always preferred BSD on the server and something else on the desktop (hurry up, Haiku!). I still wish BeOS would have gotten more traction beyond the BeBox.

Methinks the move towards FreeBSD--and it's happening in quite a few circles, will continue, especially if IBM get heavy handed with Fedora/Red Hat. I'm not worried, per se, but I am concerned, for the aforementioned reasons.

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