“When all is said and done, Red Hat won’t do much to alter IBM’s fiscal stagnation. Synergy is the
intended outcome of most acquisitions, and it’s not clear if this deal will create any synergy,” Brumley
wrote November 9. “And IBM just paid a steep price for a new revenue stream. Specifically, IBM is
forking over more than ten times Red Hat’s trailing revenue and more than 40 times Red Hat’s likely
earnings for 2019.”
Large acquisitions historically tend to go very wrong because CEOs overestimate both the synergies
from a deal and the strategic importance the acquired firm brings to the table.
Don’t get me wrong, Red Hat’s a great company, but Rometty’s going to have to come up with some
compelling reasons why this isn’t anything more than a last ditch effort to save her legacy as CEO.
Personally, I don’t think she can pull it off. On Tuesday, we’ll find out if I’m right.
More RA's and divestitures forthcoming after tomorrow's results are announced.
https://investorplace.com/2019/01/ibm-stocks-red-hat-era-begins-with-its-q4-report/