back to article Official: IBM to gobble Red Hat for $34bn – yes, the enterprise Linux biz

IBM intends to acquire enterprise Linux maker Red Hat for $34bn (£27bn). Following rumors of a deal over the weekend, Big Blue announced the move here, in the past hour, and Red Hat's take is here. IBM made an offer of $190 per issued and outstanding Red Hat share, which was accepted: the current price stands at $116. …

Unhappy

Re: Fuck !

I was going to go with a James May "Oh cock!".

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Re: Fuck !

Exactly my first thought.

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Looking at those figures, it would make more sense for redhat to buy ibm.

Ibm are a terrible business and company. 20 years of deminstrating they are incapable of being a good, well run siftware business.

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WTF?

Looking at those figures, it would make more sense for redhat to buy ibm.

Either you are missing sarcasm tags or you and I must be reading different numbers.

IBM $79b revenue vs RedHad $2.9b revenue, 3.6% the revenue of IBM.

IBM profits $5.8b (would have been $12.9b if they didn't have a one-off write-down) vs RedHat $259m, 4.4% of IBM's profits.

So IBM has 29 times more revenue and 22 times greater profits, and you think RedHat should have bought IBM?

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Nope.

Its equity - you need to look at growth and amrgin ratehr than absolute figures.

Redhat are growing and have better margins.

IBM have been stagnating for years and have loads of fixed costs.

Just compare the share price of RH v IBM.

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Umm, share price means little. Compare stock market capitalization (price * shares issued) to get a useful comparison.

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Anonymous Coward

Less than that

15 years

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RedHat take-over IBM - @HmmmYes

"Just compare the share price of RH v IBM"

You would do better to look at the execution on the numbers - RedHat is not hitting it's targets and there are signs of trouble. These two businesses were both looking for a prop and the RedHat shareholders are getting out while the business is near it's peak.

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So now it becomes Blue Hat.

Will systemd become standard on mainframes as well?

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"So now it becomes Blue Hat."

More some sort of purply colour, I'd have thought.

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Paris Hilton

More some sort of purply colour, I'd have thought

Big Purple?

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Mauve?

.oO("Well, it's like not as bad as a red alert, but a bit worse than a blue alert -- sort of a mauve alert.")

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Purple and ancient.

Barney the fucking dinosaur.

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Anonymous Coward

> Will systemd become standard on mainframes as well?

Once IBM have ported it to java, yes ;)

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Anonymous Coward

Re: More some sort of purply colour, I'd have thought

Big Purple?

I! think! that! color! is! already! taken!

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Re: Mauve?

Mauve alert, are you sure sir? It will mean changing the light bulb!

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Coat

Re: More some sort of purply colour, I'd have thought

Big Purple Hat?

Ooer, Matron.

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Anonymous Coward

Re: More some sort of purply colour, I'd have thought

Big Purple Helmet?

(Sorry, somone (with a childish sense of humour) had to say it…)

[IBM is big iron, so the fedora would have to change into a suit of armour helmet, what did you think I meant?]

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Don't be silly Red + Blue = Magenta

So Big Magenta it is.

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@Doctor

Maybe we get really lucky and they RIF Lennart Poettering or he quits? I hear IBM doesn't tolerate prima donnas and cults of personality quite as much as RH?

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Anonymous Coward

I hear IBM doesn't tolerate prima donnas and cults of personality quite as much as RH?

Quite the contrary. IBM is run and managed by prima donnas and personality cults.

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Anonymous Coward

> Don't be silly Red + Blue = Magenta

Red + Blue = Maroon - and marooned is what the users will be.

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Trollface

Zimos?

Can't help thinking that Zimos from Saints Row III should be their spokesman; now that's a big purple hat!

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@ridley

Magenta is red so red + blue can't possibly = red.

Red + blue = purple as any 4 year old knows.

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Devil

Will systemd become standard on mainframes as well?

doubtful. I think the 'culture' that produced things *LIKE* systemd aren't in line with IBM's way of doing things...

IBM really is about giving customers what they want. If customers DO NOT WANT systemd, they won't have to use it when IBM gets its way.

Think "sales and marketing" meets "engineering". The reality is that engineering needs sales/marketing, even if they're irritating as hell and drive the process too often, because it's the CUSTOMERS, and not the whims/wishes/unicorns-and-rainbows of the engineering team that get the development time assigned. no more "because we *FEEL* and people MUST accept it" (the attitude behind things *LIKE* systemd and gnome 3) is what I expect in the future... from IBM's hand in the mix.

After all - IBM has invested their future in Linux. No doubt they want THAT to continue.

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Big Magenta? I think Deutsche Telekom already took it.

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It'll be interesting to see what happens to both companies share prices on Monday. I fully expect RedHat to become another zombie under IBM's wing.

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Sad, but probably true.

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The early risers (if not them then the after-hours guys) will suck up all the Red Hat stock they can and sell about the time the max buyout price is met. IBM.. might rise a bit at this news.

If the past is any indicator, all that will be left holding either companies stocks in a week will be the suckers who either believe their stock will increase in price or will be selling short.

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Maybe ask the Bluebox guys at IBM how well things went

with their acquisition and integration into IBM. Oh wait, they are all gone

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Re: Maybe ask the Bluebox guys at IBM how well things went

Who?

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$34B? I was going to say this is the biggest tech acquisition ever, but it's second after Dell buying EMC. I'm not too sure what IBM is going to do with that, but congrats to whoever is getting the money...

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I'm not too sure what IBM is going to do with that

Close. It. Down.

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Close. It. Down

Fine with me if it means the end of SystemD and GNOME.

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Say you used to own ARM and RedHat shares.

You made a profit on both when they were borged.

But where do you invest your money now?

Obviously not in the post-borging conglomerates of doom.

(Asking for a friend.)

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Anonymous Coward

But where do you invest your money now?

In the corporate lifecycle, small companies innovate and grow (and a lot fail). Medium sized companies grow and are usually acquired by lard-arse corporates. Lard arsed corporates have to keep buying medium sized companies to restore revenue lost by their lack of innovation and agility. And half of the money is made by buyouts, half by growth - to double up you need to back the buyout material.

Small companies can offer much better returns, but much higher risk. I'd have thought you need to invest in a portfolio of mid-sized tech companies, carefully avoiding the obvious dogs, and those whose business model you don't understand (because in that situations, you're probably right, and they don't have a sustainable business model).

But each to their own. You might want to invest again in large but sub-corporate businesses like IBM and RedHat. But pick carefully, because making money there is a lot harder - if the opportunity is obvious, then the big investors will already have bid the price too high to offer the small guy any return.

And something else to consider is the macro-economics: Rising US interest rates, trade wars, Brexit, the risk of a medium term equity bear market.

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If you're in the UK, warehousing, especially cold storage.

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Coat

But where do you invest your money now?

Short duration treasuries. We are exiting "return on capital"- and entering "return of capital"- territory. The FED is raising and chaotic Brexit is looming, Volatility is growing, Indexes are up but underlying market stocks are "rotting" -> The odds of a 30% down month are basically getting better and better.

If one is getting bored and feeling lucky, there is:

BEAR x2 (or x3) certificates on an Index that is about to go "Splat!". Buy some on the coming retrace back up to moving average 200 days range for GDAXI or the FTSE, or a unicorn stock, or, whatever there is available from your local Fancy Lottery Ticket Pusher.

Just keep it small, there is risk of 100% capital loss on these things.

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Eleven days later, this was on the BBC News front page.

https://www.bbc.co.uk/news/uk-wales-46127592

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Less pessimistic here

Quite a lot of the "OMG" moments rests on three assumptions:

- Red Hat is 100% brilliant and speckless

- IBM is beyond hope and unchangeable

- This is a hostile takeover

I beg to differ on all counts. Call me beyond hope myself because of my optimism, but I do think what IBM bought most is a way to run a business. RH is just too big to be borged into a failing giant without leavinf quite a substantial mark.

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Re: Less pessimistic here

I beg to differ on all counts.

Note: I didn't downvote you, its a valid argument. I can understand why you think that, because I'm in the minority that think the IBM "bear" case is overdone. They've been cleaning their stables for some years now, and that means dropping quite a lot of low margin business, and seeing the topline shrink. That attracts a lot of criticism, although it is good business sense.

But I do beg to differ about the optimism, because, as my boss likes to quote, "culture eats strategy for breakfast". And (speaking as a strategist) that's 100% true, and 150% true when doing M&A. So the problem is that IBM have bought a business whose competencies and success factors differ from the IBM core. Its culture is radically different, and incompatible with IBM. Many of its best employees will be hostile to IBM. RedHat will be borged, and it will leave quite a mark. A bit like Shoemaker-Levi did on Jupiter. Likewise there will be lots of turbulence, but it won't endure, and at the end of it all the gas giant will be unchanged (just a bit poorer). And just like a gas giant, IBM can be considered a failed star.

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Anonymous Coward

Re: Less pessimistic here

- IBM is beyond hope and unchangeable

But that's already a given. IBM proves it to be true each and every day.

One can hope for a RH shareholder lawsuit, that might be the only thing to kill the deal.

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Re: Less pessimistic here

"This is a hostile takeover"

Nobody's claiming that. A hostile takeover would be one opposed by the board. The hostility predicted is on the part of the employees and nobody ever took their position into consideration in a takeover.

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Anonymous Coward

abandon ship

I did some work with a company that used IBM for some outsourced stuff and they were just bad. I mean, I've dealt with small local guys that cost less and did a better job.

Get an escape plan. It'll take a few years, but they'll ruin Red Hat.

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Anonymous Coward

At a premium of 63% I'm not going to blame Red Hat for taking that offer. That won't stop me feeling some level of annoyance when the inevitable collapse in product quality hits and we have to waste a year migrating everything off Blue Hat Enterprise Linux For The Hybrid Cloud Featuring Watson Cognitive Social Analytics

You will be (mostly) missed.

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Anonymous Coward

You missed "Block Chain" in that title.

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Anonymous Coward

63% premuim

will sway my vote to Yes. That will fund my buying a Tesla Model 3 even after paying the CGT on the deal as long as I don't end up getting IBM stock which IMHO is worthless junk.

I shall have to wait for the offer details to come through but RH has been a juicy target for some years whih is why I bought a lot of stock in 2014 and more in 2016.

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Large American Corporate Approach.

Large American corporation is moving very slowly due to large amounts of accreted lead.

American corporate sees dirigible, thinks "that's going much faster than we are."

American corporate buys dirigible and attaches it by cable so it can pull against the lead.

American corporate wonders why dirigible has stopped going anywhere.

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Pint

Re: Large American Corporate Approach.

American corporate wonders why dirigible has stopped going anywhere.

Nice. Have a beer on me.

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