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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

#101

Post by gridlockd »

mrep wrote: post #12
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…

CPI includes rent which has gone up 2.7% per year averaged out since 2008 [0]. I wouldn't call that extreme. As for stocks, the S&P 500 P/E ratio is about 20 which is pretty much average for recent times [1]. [0]: https://fred.stlouisfed.org/series/DTENRX1A020NBEA [1]: https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-ea...

> CPI includes rent

Yes, but rent didn't increase the same way as property prices, which is what makes those properties overvalued in the first place.

Also, averages are misleading. Of course people will first buy property in "good" areas, not "average" areas. If you look at rent or property price development in San Francisco, you will notice that.

> As for stocks, the S&P 500 P/E ratio is about 20 which is pretty much average for recent times [1]

The CAPE is at 30, double the historic average and higher than at the top of the bubble in 1929 and every year since then up until the dotcom bubble. Again, averages are misleading. All you can say is that we haven't reached dotcom levels of valuation yet.

https://www.multpl.com/shiller-pe

Re: IBM Stops Buybacks to Pay for Red Hat

#102

Post by snuxoll »

streetcat1 wrote: post #48
beagle3 wrote: post #32

Earlier quoted context omitted.

The same mindset would dictate that you only ever buy no-name hardware which is about 30% cheaper than dell/hp for the same performance characteristics... why would anyone do that? And that's why people DO pay for red-hat. Peace of mind, whether supported by evidence or not.

So people pay for redhat because they did not move to container/ microservices architecture. Any main stream technology (Mainframe, Dec/Vax, PC, VM) will always have legacy customers. However, one the state of the art architecture is micro services, the optimal runtime is kuberentes. Once everyone is on kubernetes hardware will not matter. Moreover, I would love a cloud based on second hand hardware (which should be…

> Moreover, I would love a cloud based on second hand hardware (which should be much cheaper than 30%)

I’ve wanted to do this for some time, but there’s a lot of cost involved in the space (square footage itself, electricity, cooling) that you can’t cut just by running older stuff. Bandwidth and storage cost the same regardless as well (don’t buy used disks for anything remotely important).

Re: IBM Stops Buybacks to Pay for Red Hat

#103

Post by snuxoll »

goatinaboat wrote: post #94
josho wrote: post #75

Earlier quoted context omitted.

There is no reason to discontinue their mainframe business. Banks and other institutions have applications running successfully on those platforms. The industry has learned that it is better to integrate applications than to replace—especially when the replacement is a 40 year old app that runs the business. IBM’s mainframe margins are safe for decades to come.

But, don’t you see the paradox there? If customers are happy with their mainframe why would they switch to Red Hat? And if they don’t want to switch why did IBM buy it?

They may not want to get rid of the hardware, but they may want to run something other than z/OS on it. RHEL is well supported on both IBM midrange and mainframe systemd.

Re: IBM Stops Buybacks to Pay for Red Hat

#104

Post by [deleted] »

josh_fyi wrote: post #76
riffraff wrote: post #43

Earlier quoted context omitted.

Forgive my ignorance,but what is an IBM auditor?

IBM products have no license-checking built in, on purpose. They want you to make more copies than your negotiated license agreement allows. Then, when the auditor comes in, they charge you the sky-high list price, backdating it as well.

[deleted]

Re: IBM Stops Buybacks to Pay for Red Hat

#105

Post by gridlockd »

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…

> None of this is how this stuff works.

If you make that claim, you should do some actual debunking instead of just nitpicking.

> Companies don't use debt to buy stock.

Yes, they do.

> Taking on the debt to do that would depress the stock price the same amount that the buying would attempt to appreciate it.

Maybe if valuation was strictly tied to fundamentals, which it isn't.

> This would be reflected in the CPI.

Eventually it will be, but that can take a while, because many of the prices involved in the CPI are sticky.

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

I'm sorry, I meant to write "profits" there. Sure, UBER and LYFT may have a lot of revenue, but they're losing a lot of money in the process. I wouldn't say Apple is overvalued, but clearly the market is taking its lack of growth prospects unkindly.

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

Fair enough, to be precise, that is what they are saying, and what I mean by "no inflation (to worry about)".

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

I'm aware of that, but I think it looks better this way. If writing it that way annoys just one nitpicker on the internet, it's worth it.

Re: IBM Stops Buybacks to Pay for Red Hat

#106

Post by PeterisP »

josh_fyi wrote: post #76
riffraff wrote: post #43

Earlier quoted context omitted.

Forgive my ignorance,but what is an IBM auditor?

IBM products have no license-checking built in, on purpose. They want you to make more copies than your negotiated license agreement allows. Then, when the auditor comes in, they charge you the sky-high list price, backdating it as well.

Ah, reminds me of Oracle.

Re: IBM Stops Buybacks to Pay for Red Hat

#107

Post by Nursie »

josh_fyi wrote: post #76
riffraff wrote: post #43

Earlier quoted context omitted.

Forgive my ignorance,but what is an IBM auditor?

IBM products have no license-checking built in, on purpose. They want you to make more copies than your negotiated license agreement allows. Then, when the auditor comes in, they charge you the sky-high list price, backdating it as well.

That's a little over-cynical, IMHO. They don't have licensing in the products because it's an overhead, it complicates development, and their enterprise customers are supposed to be trustworthy and in communication with IBM about ongoing requirements.

But yes, they have auditors to enforce this stuff.

Re: IBM Stops Buybacks to Pay for Red Hat

#108

Post by ineedasername »

PeterisP wrote: post #106
josh_fyi wrote: post #76

Earlier quoted context omitted.

IBM products have no license-checking built in, on purpose. They want you to make more copies than your negotiated license agreement allows. Then, when the auditor comes in, they charge you the sky-high list price, backdating it as well.

Ah, reminds me of Oracle.

Yeah, thought I heard Oracle's install media let's you install just about anything, regardless of license, for the same reasons.

Re: IBM Stops Buybacks to Pay for Red Hat

#109

Post by mbreese »

snuxoll wrote: post #102
streetcat1 wrote: post #48

Earlier quoted context omitted.

So people pay for redhat because they did not move to container/ microservices architecture. Any main stream technology (Mainframe, Dec/Vax, PC, VM) will always have legacy customers. However, one the state of the art architecture is micro services, the optimal runtime is kuberentes. Once everyone is on kubernetes hardware will not matter. Moreover, I would love a cloud based on second hand hardware (which should be…

> Moreover, I would love a cloud based on second hand hardware (which should be much cheaper than 30%) I’ve wanted to do this for some time, but there’s a lot of cost involved in the space (square footage itself, electricity, cooling) that you can’t cut just by running older stuff. Bandwidth and storage cost the same regardless as well (don’t buy used disks for anything remotely important).

An even bigger cost is power (if we’re talking about a lot of compute capacity- eg a private cloud). A cluster that’s running older servers might be 30% cheaper to purchase, but it will likely be more power inefficient, which would make it significantly more expensive to actually operate. Depending on your workload, it is often the case that purchasing new (more efficient) hardware can actually be the cheaper option than running on older hardware from an OpEx standpoint.

Re: IBM Stops Buybacks to Pay for Red Hat

#110

Post by [deleted] »

josh_fyi wrote: post #76
riffraff wrote: post #43

Earlier quoted context omitted.

Forgive my ignorance,but what is an IBM auditor?

IBM products have no license-checking built in, on purpose. They want you to make more copies than your negotiated license agreement allows. Then, when the auditor comes in, they charge you the sky-high list price, backdating it as well.

[deleted]
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