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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

#231

Post by johnvanommen »

rhizome wrote: post #211
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.

> IBM basically has control of all of Linux now. Is this really true? It seems to me that a lot of the people who control the direction of Linux might work at RedHat and IBM, but that can change. It has in the past and it will in the future, billion$ acquisitions don't make them immune.

> Is this really true? It seems to me that a lot of the people who control the direction of Linux might work at RedHat and IBM, but that can change. It has in the past and it will in the future, billion$ acquisitions don't make them immune.

There's a history of companies simply acquiring the competition:

1) Ansible was written by a former Red Hat employee, and then Red Hat simply acquired his company.

2) Centos was an open source alternative to RHEL, and then Red Hat simply acquired the company.

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

#232

Post by johnvanommen »

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.

> I think that was a smart move by IBM.

I wish Microsoft had purchased Red Hat, that would offer real synergy:

1) Microsoft could contribute to Ansible

2) Microsoft would control licensing for RHEL on Azure

3) We might see Outlook and Office running on RHEL. Or even Direct3D?

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

#233

Post by anticensor »

muricula wrote: post #219
checktheorder wrote: post #202

Earlier quoted context omitted.

I've sometimes found myself wondering what kernel is actually running Microsoft's new "Modern OS", and if the userspace has any Ubuntu input.

Hello from Redmond. It's all good old NT under the hood. NT is in Azure, XBox, anything which MS builds really. What is interesting is that Windows Subsystem for Linux v2 will actually run a Linux kernel in a VM. I guess implementing a syscall emulation layer for all of Linux was too much, but they still did a very impressive job.

WSL 1 allows for more security. What they should have done was map WSL users 1:1 to Windows users (Wine users work like that). setuid(), seteuid() and/or capability elevations would raise an UAC prompt as if they were called from Windows.

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

#234

Post by johnvanommen »

jackhack wrote: post #75
bloopernova wrote: post #68

Earlier quoted context omitted.

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…

I usually put it this way: "Name one company that was better after a merger." I've yet to find any affirmative answer. It's good to have hope, but it's not good to be unrealistic.

> I usually put it this way: "Name one company that was better after a merger." > I've yet to find any affirmative answer.

> It's good to have hope, but it's not good to be unrealistic.

* HP paid $4.5B for LoadRunner : https://en.wikipedia.org/wiki/Mercury_Interactive

* HP paid $1.6B for Opsware

* HP paid $1.2B for Palm

* HP paid ELEVEN BILLION for Autonomy

https://en.wikipedia.org/wiki/List_of_acquisitions_by_Hewlet...

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

#235

Post by johnvanommen »

voidfunc wrote: post #27

This is a great move for both companies. The doom and gloom in this thread is depressing. RedHat gets access to IBMs massive sales machine and IBM picks up a number of key technologies. Win-win.

> This is a great move for both companies. The doom and gloom in this thread is depressing. RedHat gets access to IBMs massive sales machine and IBM picks up a number of key technologies. Win-win.

If you review HP's acquisitions, you can see the "worst case scenario."

IE, what if they just drive the acquisition into a ditch?

When I worked at HP, we saw lots of customers who needed automation software, and it seemed like nobody at HP was even aware that we offered a competitive product. (Opsware aka "hp server automation.")

https://en.wikipedia.org/wiki/List_of_acquisitions_by_Hewlet...

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

#236

Post by the_why_of_y »

einpoklum wrote: post #146
stirfrykitty wrote: post #143

Earlier quoted context omitted.

I don't think he was being sarcastic. systemd came from Red Hat employees. It's now effectively everywhere, even in Debian and derivatives. This is not meant to be a systemd sucks rant, but if a distro is using systemd, and most do, they are using Red Hat-developed software, and a most critical piece at that. Gnome, the usual DE for enterprise Linux installs is heavily tied into systemd now. It goes on and on.

It's not in Devuan. With some community effort - that means _you_ - putting pressure on Debian to reverse their decision, it can go out of Debian, easily.

You do not understand how Debian works. Those who do the work make the decisions, not some random HN posters' "pressure".

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

#237

Post by formercoder »

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…

Let's not confuse accounting earnings with cash flows. Red Hat is generating a decent amount of cash ~1B in cash from operations (difference from 433M mostly due to stock based comp and deferred revenue, common for software companies).

I didn't look into the details of the deal but IIRC $34B is the enterprise value, so it probably includes a refinancing of Red Hat's debt. RH had ~20M in interest last year, so you can take that off of the 700M.

So now we're talking about 680M in marginal interest expense on a firm with ~950M in pre-transaction free cash flow to equity. Not to mention RH's 65% top line growth in 2018, we'll see if that happens again. This transaction could be cash flow positive right off the bat.

Also Red Hat is operating at an ~18% ebitda margin (did not go looking for add backs), I'm assuming IBM can get that up.

Of course, it's easy to imagine IBM just torching all of Red Hat's top line... can't rule that out.

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

#238

Post by kevin_b_er »

stirfrykitty wrote: post #140
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…

Ignore SystemD even for a moment.

Check out how many projects Red Hat claims to "maintain" https://fedoraproject.org/wiki/Red_Hat_contributions

IBM could leave GNOME, gtk, and graphics stuff out to dry. After all, GNOME doesn't sell cloud server support contracts.

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

#239

Post by billman »

iamnotacrook wrote: post #18
rxhernandez wrote: post #10

Earlier quoted context omitted.

At least it wasn't Oracle?

All companies will end up sucking in the end, because they're all in it for the money, and you can always make a little more money acting unscrupulously. Oracle, IBM, Microsoft, Google - they're all essentially one company, at heart. --- I like the Walrus best," said Alice, "because you see he was a little sorry for the poor oysters." "He ate more than the Carpenter, though," said Tweedledee. "You see he held his han…

+1 for storytime

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

#240

Post by stirfrykitty »

pepemon wrote: post #204
stirfrykitty wrote: post #163

Earlier quoted context omitted.

It's all in what people are willing to tolerate or change. Obviously, the gentlemen over at Haiku feel they have something to offer, as small as it may be. I always though that BeOS was somewhat revolutionary in its approach. I'm still somewhat bothered that Apple let their server offering go. And yes, FreeBSD replaces Linux easily. Not everyone runs their stuff in the cloud. It's not the be-all and end-all. Serious…

Please elaborate on "more and more IT guys I know move over to Free/OpenBSD" and your mentioned easiness of migration.

I know former colleagues on the East coast and in the EU who I stay in contact with who, oddly enough, they are all looking at NetBSD for embedded HW work. We all used to work together at a small startup in NOVA, but we all parted ways about 12 years ago. All four of us did *nix stuff and more or less still do, but I'm pure SW, while they are more HW/SW integration.

These are but a few. Here in the Houston area, there are tons of FreeBSD/OpenBSD users.

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