Tag Archives: IBM

IBM Grabs Open-Source Red Hat for $34 Billion

The eight-striped wordmark of IBM, the letters “IBM” in City Medium typeface. Introduced in 1967. Trademarked by International Business Machines Corporation.

Declared the third largest tech merger in history, and the largest for a software company, IBM and Red Hat have come to a deal in which IBM will purchase Red Hat for $34 billion. IBM says the merger will improve their cloud-based products.

The deal involves IBM getting all the issued and outstanding common stocks of Red Hat for $190 each share in cash. That surpasses by $70 the price of the stock just three days prior, $116.68 a share.

“The acquisition of Red Hat is a game-changer. It changes everything about the cloud market,” said IBM’s chairman, president and CEO, Ginni Rometty.

“IBM will become the world’s number one hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.”

Most companies can’t progress due to the limits presented by closed platforms that prevent them from making the transformation to cloud computing. Red Hat solves the problem for IBM due to its open platform configuration.

IBM earned it reputation as a computer hardware company, but it has recently made cloud computing a priority for its growth strategy, like Amazon and Microsoft. The company has been changing their focus to include more analytics, mobile and security.

Red Hat will continue to run its business independently as a separate unit of IBM. Red Hat president and CEO Jim Whitehurst and the management team already in place will continue as is, joining IBM’s senior management team, with Rometty leading the team.

“Today is a banner day for open source,” said Paul Cormier, Red Hat’s vice president and president of products and technologies. “The largest software transaction in history and it’s an open source company. Let that sink in for a minute. We just made history.”

Red Hat was founded in 1993, launching its famous version of Linux OS one year after. It became a pioneer of the open source movement that grew to counter closed source companies like Microsoft which based their strategy on keeping their source codes secret.

The company is based in Raleigh, North Carolina with a presence in 35 countries with about 12,000 employees. It is one of the most well-known open-source firms with customers paying for custom-made software solutions. In fiscal year 2018 the company saw a net profit of $259 million on a turnover of $2.9 billion, which was an increase of 21 percent over 2017.

US District Court Dismisses Apartheid Suit Against Ford and IBM

After lingering in the US justice system for 12 years, a federal judge dismissed the lawsuit which accused the Ford Motor Company and IBM of aiding and abetting human rights violations in what was then apartheid South Africa.

US District Judge Shira Scheindlin justified the dismissal by explaining that the plaintiffs, who are black South Africans, did not show “relevant conduct” within the US by IBM and Ford to find the companies responsible.

IBM and Ford, in addition to other companies, were accused of helping the government of South Africa, which was practicing apartheid at the time; commit serious human rights violations including torture and murder, by selling military vehicles and computers to the security forces of the regime.

The lawsuit was brought under a 1789 law known as the Alien Tort Statute. This law allows non-US citizens to bring lawsuits against US entities who may have committed crimes violating international law. In April last year the US Supreme Court said that the law only covered laws broken in the US; or violations outside the US that “touch and concern” US territory “with sufficient force.”

The following August the federal appeals court in Manhattan asserted the Supreme Court’s decision, saying that the cases against IBM and Ford should be summarily dismissed.
This past April Judge Scheindlin allowed the plaintiffs to have just one more chance to try and meet the standards set by the Supreme Court’s decision. This past week Scheindlin announced that the plaintiffs did not meet that standard. She said that any supposed violations of international law were performed by the company’s South African subsidiaries, and off of US soil.

“It’s been 12 years. We’re devastated by the decision,” said Diane Sammons, a partner at Nagel Rice in Roseland, New Jersey, who represents some of the plaintiffs.

Lenovo in Negotiations for Purchase of IBM Server Unit

Lenovo, the world’s largest PC manufacturer ever since it passed Hewlett Packard for that distinction last year, is looking to purchase a low-end server from IBM. The purchase would help Lenovo to expand its efforts to diversify as the PC market continues to shrink. IBM is looking to unload the unit so they can concentrate their focus more away from hardware and more towards software and services.

China-based company Lenovo seeking IBM server
China-based company Lenovo seeking IBM server

The two computer giants are re-starting negotiations for the deal after they could not come to an agreement on valuation of the deal last year and talks fizzled. At the time of the first round of talks reports said that IBM was hoping to get between $4 billion and $6 billion for the server unit, but Lenovo, a China-based company, only offered $2.5 billion.
Today analysts estimate the server’s valuation to be between $2.5 billion to $3 billion. If the deal is concluded it will be the largest deal so far in the IT sector of China, even surpassing the buyout of 91 Wireless from NetDragon Websoft Inc by Baidu Inc for $1.85 billion last year.

“Everybody wins because even if IBM could double the profitability it’s still not good enough for IBM. On the other hand, Lenovo doubling the server business margins is a good deal for Lenovo,” said Alberto Moel, a Hong Kong-based analyst at Sanford C. Bernstein.

Watch Your Back IBM, Oracle’s Coming

Larry Ellison of Oracle says he is ready to take on computer hardware giant IBM. Ellison is threatening to overtake them in control of the market share of business network hardware, and that includes high-end computer servers.

Ellison, who has been with Oracle since it was founded in 1977, was speaking during the prestigious All Things Digital conference during an “on-stage” discussion with Kara Swisher.

“Our biggest competitor is IBM,” Ellison said. “IBM was number one in databases. Now we are number one,” he said.

“And they were number one in middleware (programs that help different elements of a computer system communicate), now it’s us; they were number one in high-end servers, and we will be number one in the high-end servers.”

However Ellison pointed out that when it comes to services, Oracle cannot compete with the century-old IBM, which has made services a priority over the course of many years.

Today Oracle is ranked fourth worldwide in server market revenue, according to statistics released on Wednesday by IDC.  The leader in the server market is currently Hewlett-Packard with 29.3 percent of market share; IBM is second with 27.3 percent; and Dell has 15.6 percent.

Ellison also announced at the conference that as of June 6 all Oracle software will be available online in the internet “cloud.” He promised to send out his first “tweet” on the mini-blogging site Twitter on that historic day, to mark the occasion.

Loose-Lipped Consumers Bring Joy to Retailers

Consumers will share personal information for a better shopping experience

The results of a survey conducted by IBM on 28,000 people in 15 countries showed that people are much more willing to share personal information if they believe in return they will get a more personalized shopping experience.

People are willing to divulge more about themselves with their favorite merchants, from their food allergies to their home addresses. This survey’s conclusions were met with pleasure by the business world as companies are constantly looking for ways to target the perfect demographic of shoppers with their latest creations.

“They are willing to share information if there is perceived benefit,” said Jill Puleri, global retail leader of IBM’s  global business services. “It doesn’t have to be monetary benefit.”

There is still a certain hesitation from consumers all over the world about giving their personal financial information, like their incomes; but other private information is almost there for the asking.

One example is that about 75% of the people in the survey were ready to reveal details about how they use media such as television, like which TV shows that watch. A similar number had no problems telling what ethnic group they were members of.

A somewhat smaller group, 61% were comfortable sharing their names and addresses with retailers. For 59% of the people questioned it was not a problem to describe lifestyle-related information such as how many cars they own, if they live in a new home, or if they had just had a child.

“These are things that I think are pretty important to a retailer,” Puleri said, adding that the change in shopper behavior was phenomenal.
“We have always thought the consumer was pretty guarded with their information,” Puleri added.