The New York Securities Exchange (NYSE) market shows the Wednesdays boost has resulted in a cool-down, with a visible 3% profit. IBM has its fourth-quarter sales stable from year to year, totaling $21.8 billion. However, IBM bought Red Hat on July 9, 2019. Then, promised a 60% premium bonus for the workers of Red Hat if they hurry up with developing the hybrid-cloud server software.
IBM is showing a big interest in the open-source software company which is probably one of the few software firms that can make huge profits being a part of the Linux community. When IBM bought Red Hat for $34 million, they have created additional debt for the corporation.
However, the investment was worth it, because the cloud server solutions based on the open-source software is a very profitable thing. The deal is already generating profits, and IBM is expecting massive incomes in 2020.
Imagine that you rent cloud servers for one of your dearest projects, and users require privacy and transparency. You will certainly pick Linux-based software over Windows, and the code must be open for peer-review to infuse trust and increase the fees you can charge for your services.
Analysts Say IBM Stock Will Grow, RH Stock Could Fall
While observing the financial report posted by IBM, Moshe Katri from Wedbush says:
“The bottom line, IBM’s financial metrics continue to be negatively impacted by ongoing revenue/pricing cannibalization of legacy software/services as services delivery utilize [social, mobile, analytics and cloud]-related technologies and as enterprises continue to change the way they buy software”
Dave Bartoletti from Forester says IBM has resources to keep up with FAANG stars:
“While IBM has struggled to keep up with Amazon Web Services, Microsoft and Google in the public cloud market, this deal gives IBM a new stronghold in the cloud development platforms market”
John DiFucci from Jeffries points on the fact that Red Hat is entering the competitive market of hardware vendors. Where sharks bite each other too often and operating systems could be used to manipulate gamers, code developers, hardware giants and even the choice of investors:
“As an Operating System vendor first, its neutrality to all hardware vendors was an important characteristic in our opinion. The IBM acquisition certainly calls that neutrality into question… Concerning the IBM/Red Hat combination, we question whether this will have a negative effect on Red Hat’s business”
KeyBanc’s Alex Kurtz suggests that Google or Cisco could enter the play, but the probability of the bidding war is very small.
Michael Turits from Raymond James analyst firm believes that the bidding war may start soon. Microsoft, Google or Oracle could wish to offer the wise heads under the Red Hats millions and millions to abandon IBM and change the House in the Game of Thrones. Michael thinks that IBM’s move will force Microsoft to look into Linux-based software development to keep up with the unstoppable privacy trends.
Jeff Fawkes is a seasoned investment professional and a crypto analyst covering the blockchain space. He has a dual degree in Business Administration and Creative Writing and is passionate when it comes to how technology impacts our society.