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IBM Stops Buybacks to Pay for Red Hat

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Re: IBM Stops Buybacks to Pay for Red Hat

#51

Post by kgwgk »

mathattack wrote: post #37

A dying company trying to extend their “squeeze your base” policy to another vendor. I think they overpaid for RedHat. After a particularly painful audit at my Fortune 500, we kicked out RedHat. We spend more time talking to IBMs auditors than we do to their Salespeople and engineers. This merger seems like the modern version of HP and Compaq. The only winners are the shareholders who bolt early. Customers, employees…

Late shareholders didn’t lose anything. (Assuming you mean RedHat’s shareholders, because if you mean IBM’s then the reference to customers and employees makes less sense.)

Re: IBM Stops Buybacks to Pay for Red Hat

#52

Post by sys_64738 »

pm90 wrote: post #19
streetcat1 wrote: post #14

Earlier quoted context omitted.

There is nothing to drag. A single server distro is becoming irrelevant as the unit of computation resources is the kubernetes cluster. I.e. all the app see is a set of kubernetes nodes, it does not really care what server disto you are running on.

Red Hat is more than its products. The engineering talent at the company is astounding. I remain skeptical that they will remain for long though.

The talented ones usually jump ship sooner than later. Many will be offended to be working for IBM now. Those that remain are the others.

Re: IBM Stops Buybacks to Pay for Red Hat

#53

Post by crumpets »

streetcat1 wrote: post #50
ryukafalz wrote: post #33

Earlier quoted context omitted.

Red Hat does a lot more than just RHEL. They've got a Kubernetes distribution (OpenShift) and a ton of useful software under their umbrella. (Ceph, GlusterFS, FreeIPA, Ansible... etc)

So all of those are quite exotic, and thus risky / expensive to support.

Kubernetes is still quite exotic for 99% of businesses.

Re: IBM Stops Buybacks to Pay for Red Hat

#54

Post by streetcat1 »

mike_hearn wrote: post #41
streetcat1 wrote: post #11

Earlier quoted context omitted.

Becuase of kubernetes. The platform of platforms. Kubernetes is the andriod to amazon iphone (in analogy). It is the only way to get out of cloud vendor lock in. IBM is mainly a consultancy business, so they basically back integrated with the cloud os - kubernetes, or more specifically in this case - open shift. The only issue here is that are around 23 or more certified kubernetes distors, so this might have been an…

Kubernetes has nothing to do with cloud vendor lockin. I don't know where you're getting this from. Any hosting provider can spin you up some managed Linux nodes on a bunch of distros and they can be admined by the same tools and same people. That's why all the big clouds spend so much effort creating new services with custom APIs that aren't just "run a process in a chroot jail with fiddly bits". Big Data, AI and so…

I getting it from Jo Beda, the CTO of heptio (now VMWARE). More specifically , from his definition of cloud native.

A cloud native system is a system that manage its resources via an API. The vendor locking in this case is the cloud API. I.e. if I want a resource (e.g. a VM) , I need to use the EC2 api.

With kubernetes, I write to the kuberentes API which is open source, cloud vendor natural.

However, and this the key to my comments - kubernetes is the platform of platforms. It is an API platform and not just an API.

In the future (some would say near future), all of the cloud services will be offered as kubernetes APIs (via a set of domain specific CRD). I am currently working on the AI platform.

As for the big machines comments. I absolutely agree. However, I would like to ignore the actual hardware (banning some sort of HA that would require at least 2 machines).

Re: IBM Stops Buybacks to Pay for Red Hat

#55

Post by criddell »

Jabbles wrote: post #27
criddell wrote: post #20

Earlier quoted context omitted.

Are there buyback limits? Is it possible that company could buy all of it's stock?

This is known as "going private". https://www.investopedia.com/terms/g/going-private.asp One example is Dell: https://en.wikipedia.org/wiki/Dell#2013_buyout Also see Elon Musk's infamous tweet about Tesla: https://en.wikipedia.org/wiki/Tesla,_Inc.#Securities_Litigat...

So a company that has gone private isn't owned by another entity? There are no external stakeholders?

Re: IBM Stops Buybacks to Pay for Red Hat

#56

Post by crumpets »

gridlockd wrote: post #5

What laypeople need to realize is the following relation: Low federal funds rates allow companies to acquire huge amounts of debt very cheaply. Huge amounts of cheap debt allow companies to buy lots of stock, driving up prices. Stock prices inflated in such a way are not supported by fundamentals and so the downside risk greatly increases. Once the downside eventually materializes, markets drop violently. At first, t…

None of this is how this stuff works.

>Huge amounts of cheap debt allow companies to buy lots of stock, driving up prices.

Companies don't use debt to buy stock. Taking on the debt to do that would depress the stock price the same amount that the buying would attempt to appreciate it.

>All of this causes massive asset price inflation.

This would be reflected in the CPI.

>Stock prices are detached from actual revenue

No they aren't. See UBER/LYFT/AAPL.

>so the FED gets to claim "there is no inflation"

The Fed does not claim that. They claim inflation is nominal near their intended target.

Finally, stop saying FED. It's not an acronym.

Re: IBM Stops Buybacks to Pay for Red Hat

#57

Post by rafiki6 »

goatinaboat wrote: post #35
_delirium wrote: post #6

Earlier quoted context omitted.

The general strategy seems to be: IBM's customers have been slowly transitioning from proprietary IBM OSs (AIX, z/OS) to Linux for a lot of their workloads, and IBM has accommodated this out of necessity, but wants to retain licensing revenue and some degree of branding/control in that situation by having such customers on an Enterprise IBM Linux. RHEL more or less already owned the Enterprise Linux space, so IBM jus…

IBM's customers have been slowly transitioning from proprietary IBM OSs (AIX, z/OS) to Linux for a lot of their workloads Yes, but that’s only a coincidence. What they have really been doing is transitioning from proprietary to commodity hardware. Which IBM no longer makes. Where does IBM make money? Mainframe sales. There can be only one winner here... IBM will need to kill off their mainframe business to justify th…

IBM makes most of their revenue from their global technology services division, followed by their software division and then global business services division. A small fraction of their revenue comes from their mainframe/hardware business now. In essence that business only lives for legacy purposes.

Re: IBM Stops Buybacks to Pay for Red Hat

#58

Post by temac »

koolba wrote: post #28
orev wrote: post #18

Earlier quoted context omitted.

You do realize that those containers eventually need to be hosted somewhere , right? That somewhere is a server running an operating system. Containers are more a threat to virtual machine OSes than ones that host containers.

But the hosts no longer need the full distro stack traditionally provided by a RHEL. Just a thin enough veneer for a container runtime with live kernel updates. Maybe there’s a market for intra container licenses but it’s a harder sell as even there the goal is to go slim.

So you remove all the traditional services from the OS "definition", and roll your owns (in one particular context). Don't worry, soon enough some people will be tired of reinventing the wheel each in their own corner, and what you call "a market for intra container licenses" (potentially in the form of free commoditized open-source licensed components -- but that is not really new for that comparison, because truly free open-source distro already exist; you don't have to use RHEL) will exist, simply because it makes absolutely no economical sense that everybody redevelops or even just manages everything all the time.

Re: IBM Stops Buybacks to Pay for Red Hat

#59

Post by goatinaboat »

rafiki6 wrote: post #57
goatinaboat wrote: post #35

Earlier quoted context omitted.

IBM's customers have been slowly transitioning from proprietary IBM OSs (AIX, z/OS) to Linux for a lot of their workloads Yes, but that’s only a coincidence. What they have really been doing is transitioning from proprietary to commodity hardware. Which IBM no longer makes. Where does IBM make money? Mainframe sales. There can be only one winner here... IBM will need to kill off their mainframe business to justify th…

IBM makes most of their revenue from their global technology services division, followed by their software division and then global business services division. A small fraction of their revenue comes from their mainframe/hardware business now. In essence that business only lives for legacy purposes.

Mainframes were driving growth as recently as last year https://www.datacenterknowledge.com/ibm/mainframes-continue-...

Re: IBM Stops Buybacks to Pay for Red Hat

#60

Post by kgwgk »

crumpets wrote: post #56
gridlockd wrote: post #5

What laypeople need to realize is the following relation: Low federal funds rates allow companies to acquire huge amounts of debt very cheaply. Huge amounts of cheap debt allow companies to buy lots of stock, driving up prices. Stock prices inflated in such a way are not supported by fundamentals and so the downside risk greatly increases. Once the downside eventually materializes, markets drop violently. At first, t…

None of this is how this stuff works. >Huge amounts of cheap debt allow companies to buy lots of stock, driving up prices. Companies don't use debt to buy stock. Taking on the debt to do that would depress the stock price the same amount that the buying would attempt to appreciate it. >All of this causes massive asset price inflation. This would be reflected in the CPI. >Stock prices are detached from actual revenue…

> Companies don't use debt to buy stock.

Sure they do.

Edit: https://www.bloomberg.com/news/articles/2019-08-08/companies...

By the way, the claim “Taking on the debt to do that would depress the stock price“ doesn’t seem correct. The influence of leverage on valuation is complex and depends on the cost of debt and equity, tax shielding considerations, the increase in risk due to the financial leverage... and essentially on what the money is going to be used for.

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