Whoomp! (There it is)
IBM is making a big move to bring more software developers under its corporate wing by acquiring Red Hat, the largest distributor of the popular open source operating system Linux, for $34 billion.
https://www.nytimes.com/2018/10/28/business/ibm-red-hat-cloud-computing.html?partner=rss&emc=rss
Great comments above. Every IBM software group acquisition has being a disaster. Red Hat Employees ... get out now. Don’t wait.
Everyone's going to get fired for choosing BlewHat....
RIP: Kernel development, Ansible, OpenShift, Ceph, Gluster, JBoss, keep going...
Three words for you peeps: AOL. Time. Warner.
I am not an employee, but here are my two cents. IBM is, as far a I can tell, the best example of a "mixed bag" in tech. I have heard both great and terrible things about IBM from customers, employees, developers on Open Source projects, etc. They are a huge organization, and one that seems more divided than many.
It may be more useful to view IBM as a collection of fiefdoms rather than a single, focused, entity. Yes, the money all goes into one pot at the end of the day, but there's large variance across organizations within IBM.
That said, from what I can tell OSS that goes into the IBM machine doesn't usually come out the other side improved. I worry for the health of CentOS/RHEL/Fedora under IBM's leadership. My desktop and server OS of choice, with a few brief forays into other territories along the way, has been from Red Hat for 23 years. I'd hate to lose Fedora or CentOS, or see them stagnate. Red Hat has been among the most steadfast in their support of Open Source software, as well...so, there's a real risk of the kernel, Gnome, and other OSS core infrastructure suffering, because Red Hat is a major contributor to those projects.
I don't think it'll be sudden. It usually takes years for projects to become clearly worse for having come under IBM's purview. Red Hat is large itself, and will probably take years to be fully assimilated and homogenized into IBM's lukewarm culture of mere competence with regard to their Open Source contributions.
Where will they find the money and how will they find free cash flow to service the debt?
I am 100% sure they will spin off GBS within next six months. We'll also have a massive RA to free up cash flow - they will probably hit GBS big time before they spin them off (to have them look "light" on paper - needless to say, the customer will notice)....
How the hell is Redhat a cloud company? Sure they make operating systems and other parts, but just like pep boys isn't a car company, red hat isn't a cloud company.
So the strategy is clear: buy and bleed old platforms as long as they can. This sends a message that they can't build anything, and aren't going to innovate anymore.
Note to mods..you'll need a 'red hat' section here soon.
More likely that IBM'ers get the pink slip than the Red Hats. Gotta pay for this acquisition somehow. Think Ginny's statement said no work force changes at this time ( of course that means today only)
This begs the question of how IBM could afford to pay that much for an extremely overvalued company, meaning here we are at Softlayer all over again.
How do you think they’ll raise the capital to fund the acquisition? The sale of Services, which is fairly obvious at this point. But that alone won’t even make a dent.
You know what that means, folks. A Tsunami of layoffs.
I’m setting sail with Services until we get pillaged by our buyer. I know I’ll be walking the plank along with every talented and hard working consultant.
Best of luck, everyone.
RA Ginni Rometty and make Jim Whitehurst CEO. Best possible plan for big blue. What are the odds?
Best case scenario is that this turns out to be a reverse merger in disguise. RedHat is allowed to operate independently, and the successful/marketable IBM software is moved underneath their management. The Power, z, and enterprise storage hardware, which is profitable but not growing, then gets sold off to a buyer that is happy to milk the cow -- or even spun off, keeping the IBM name for itself. The remaining bits and pieces -- GBS, legacy on-prem software, whatever else is left -- get sold to various buyers probably in India.
And lo and behold, IBM has effectively sold the juicy bits of the company to Red Hat in a tax efficient way that makes the shareholders happy.
The big question is what will happen to the marquee "big bets" that have conspicuously not paid off, most notably Watson, Softlayer/IBM Cloud, and blockchain. This might be the opportunity to get out from under them, one way or another.
Blue Washing turns acquired companies into the same old, un-innovative, stale company IBM no longer wants to be. IBM has failed at the cloud, now they think they can buy the cloud. LOL, no - thats not the way it works.
Oh man, IBM is going to completely destroy Red Hat, oh no.
No matter how you spin it, the guy who was the boss, now HAS a boss. There is now one less player in the job market, is another way to look at it.
Ummmm......
Dude.
IBM's total ANNUAL REVENUE (not profit, top-line revenue) is under $80b now.
This is almost 1/2 of IBM annual revenue.
How on god's green earth are they going to pay for this?
Hoo boy...
Whole lotta Red Hatters soon to get laid off, especially those over 40.
Whole lotta developers in India, who don't know anything about kernel development, about to get a crash course in kernel development.
(Please ask HP how well that worked out for them, when they shifted VMS engineering to India, only to have to bring it back to the USA after the melt-down, and sponsor an independent US company to take it over).
Yep watch RedHat popularity plummet... IBM marketing donkeys will soon rebrand it BlueNix or IBM Linux for Hybrid Cloud.. yadda yadda
R.I.P. Redhat. You WERE a great company.
More details:
IBM will pay $190 per share for the software company, a more than 60% premium to Red Hat's closing stock price on Friday.
JP Morgan advised IBM on the deal and provided most of the financing. Guggenheim Partners represented Red Hat on the deal.
Red Hat will join IBM's Hybrid Cloud team as a distinct unit, preserving the independence and neutrality of Red Hat's open source development heritage and commitment, current product portfolio and go-to-market strategy, and unique development culture.
Red Hat will continue to be led by Jim Whitehurst and Red Hat's current management team. Jim Whitehurst also will join IBM's senior management team and report to Ginni Rometty. IBM intends to maintain Red Hat's headquarters in Raleigh North Carolina.
Oh those poor RedHat folks better prepare for a Blue Washing. . .