Breaking: IBM to Acquire RedHat

https://www.cnbc.com/2018/10/28/ibm-is-reportedly-nearing-de…

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Watch out tomorrow, all software companies stock price is moving up…

Amazing what cash rich old line companies will do for some growth. They will not invest but buy… go figure…

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65% premium to Friday’s close?!

Hoping for a buyout is never a good investment thesis, but this shows the underlying value of these types of companies. They are real businesses and many many stalled tech companies will pay to own them.

This is how I believe we should look at these types of companies. As owners and partners, and forget short term movements regardless of what direction they are in.

Ol IBM may have just cured our sell off. We will see.

Yeap! They could have bought CLDR and HDP lot cheaper…

I also hope the software companies move up strongly. Also that is an opportunity to get out!

I would hope you folks on this board well-versed in these types of companies could assemble a list of possible “sympathy plays” before tomorrow?

Meanwhile, S&P 500 futures open at 6:00 PM tonight.

Pivotal, Mongo, Nutanix (as Red Hat just got into the ROBO space for HCI). They probably bought Red Hat primarily for what it does in competition w Pivotal and containers.

Mongo because they are sales partners and IBM uses Mongo internally for quite a lot.

IBM uses Nutanix for its HCI on its power chip.

Amongst three off top of my head.

Tinker

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Google with $100B cash on its balance sheet can pick up lots of companies. But they will mostly buy early stage companies.

Watch out tomorrow, all software companies stock price is moving up…

Given that Red Hat’s HCI competes with Nutanix, it may be possible that NTNX goes down. They already got hit when IBM announced their Multi-cloud Manager (here’s a Fool article on the subject: https://www.fool.com/investing/2018/10/15/ibm-takes-aim-at-n… ).

I can’t predict what Mr. Market will do, but perhaps a stronger Red Hat, or at least a Red Hat with IBM’s salesforce and client list, might scare people away from competition like Nutanix.

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perhaps a stronger Red Hat, or at least a Red Hat with IBM’s salesforce and client list, might scare people away from competition like Nutanix

I don’t think RedHat’s adoption is going to gain any market share because of IBM. Redhat already has data center presence and mind share. It is simply RedHat was offered insane price and the board has fiduciary duty to accept it.

I don’t think this deal makes Nutanix competitive position any worse than Friday. Also, there is a huge chance that IBM’s cost cutting, financial engineering culture will impact RedHat and expect lot of folks leaving pretty soon, assuming their options, RSU get vested due to change of control.

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Don’t forget RedHat itself under serious competitive pressure from AMZN, GOOG, and MSFT.

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I think this will highlight the value of both Nutanix and Pivotal. I don’t fear any competition from the new entity for Nutanix - their top competitor is VMWare, I think.

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I concur. IBM is not going to make Red Hat a better company or provide it more value like Salesforce did with Mulesoft. But always fun the corporate drama.

Tinker

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