9 ms·
IBM Stops Buybacks to Pay for Red Hat
- indopedia 7y agoLearning RHEL now :)
- downrightmike 7y agoNow would be the time to get out before IBM crushes RedHat's soul. IBM will squeeze RH for everything and more to get that cash pile back asap.
- techntoke 7y agoYou're much better off learning core Linux utilities like from installing Arch, rather than outdated distro specific management.
- McAtNite 7y agoAssuming he’s coming from a Windows background learning core Linux utilities on Redhat is also possible. At least going through rhel he can reference the Redhat documentation which tend to be far better written than the million free guides out there. As a real life example, the other day I needed to migrate /var on a Linux box. The freely available CentOs guides covered it well, but when I was done the applications were having a lot of issues. Going through Redhat’s documentation it quickly became obvious that the other articles neglected to mention rebuilding the grub boot files and getting SELinux running on the new directory.
- techntoke 7y agoConsidering that after RHEL took over CentOS, they are again significantly behind RHEL, and RHEL isn't cost-effective... he could find equal support and probably much more from the Ubuntu community. CentOS or RHEL doesn't even have a public package search, and for good reason. When you find out that they are using an outdated kernel, and outdated qemu/libvirt components, you'll quickly find yourself installing RPMs from a bunch of different locations from Google searches.
- deleted 7y ago[deleted]
- the_why_of_y 7y agoLooking at the "Delay" column in the release tables in Wikipedia, it appears that it's CentOS7 releases that have longer delays, the CentOS6 delays haven't changed in recent years (and there's nothing like the huge delays in 2011). Possibly because there are more packages being updated in 7? https://en.wikipedia.org/wiki/CentOS https://en.wikipedia.org/wiki/CentOS Package search is on https://git.centos.org/ https://git.centos.org/ For example, libvirt is at version 4.5 in CentOS 7.6, while CentOS 7.0 shipped with version 1.1: https://git.centos.org/rpms/libvirt/commits/c7 https://git.centos.org/rpms/libvirt/commits/c7 Whereas in Ubuntu 18.04 LTS, it's at version 4.0: https://packages.ubuntu.com/search?keywords=libvirt&searchon=names&suite=bionic§ion=all https://packages.ubuntu.com/search?keywords=libvirt&searchon... The RHEL kernel's version number is doesn't signify as much as you'd think, there are whole subsystems backported into it from later upstream kernel releases.
- raesene9 7y agoInteresting. This seems like a big bet for IBM given that they used over 70% of their cash pile to buy Redhat. That said the picture painted by this article is that doing nothing wasn't an option, declining revenues is not a good picture at a time when the competition are posting record numbers...
- hodgesrm 7y ago> If all goes according to plan, IBM forecasts a sales bump of 2% over the next 5 years, but it will take 2 years before Red Hat contributes to earnings. These are not good projections. It's really hard to understand how RedHat acquisition makes any financial sense whatsoever if this is the actual effect. RH annual revenues were $3.36B for FY2019. [1] That's a tiny fraction of IBM's current revenue. [1] https://investors.redhat.com/news-and-events/press-releases/2019/03-25-2019-201454520 https://investors.redhat.com/news-and-events/press-releases/...
- mrtksn 7y agoCan someone explain why Red Hat is so valuable? Why would IBM put such a big bet?
- _delirium 7y agoThe general strategy seems to be: IBM's customers have been slowly transitioning from proprietary IBM OSs (AIX, z/OS) to Linux for a lot of their workloads, and IBM has accommodated this out of necessity, but wants to retain licensing revenue and some degree of branding/control in that situation by having such customers on an Enterprise IBM Linux. RHEL more or less already owned the Enterprise Linux space, so IBM just bought them instead of developing something in-house. Along with IBM getting an Enterprise Linux brand out of it, they also seem to be hoping some RHEL customers who aren't otherwise IBM customers might be converted to buy more stuff (e.g. maybe some of them can be sold on RHEL/POWER9 servers). (Whether that justifies the valuation I don't know enough to guess on.)
- chr15p 7y agoOther way round, IBM are hoping that a lot of their customers who aren't already big Red Hat customers can be converted to using RHEL and (especially) Openshift. They already have all the sales and delivery relationships in place that they need to do really big (like 100 million to billion dollar big) deals, much bigger then anything Red Hat has been able to sell on their own. They also have relationships to sell RHEL/Openshift to IBM customers that RH struggled to get through the door of. So if they can get big growth in the number and size of Red Hat deals by selling to their existing customers then they can grow RH massively and of course all growth in Red Hat deals is growth in IBMs profits. And if they can sell some of them RHEL on POWER9 they will be very happy to take that money as well :)
- ethbro 7y agoAnd that's also a good defensive move. Given the market is moving, even IBM's major customers would eventually migrate to newer technologies. (On the order of decades) By providing something that mostly satisfies that need, IBM essentially drilled a relief well to take the pressure off. When they're ready to migrate, they could get 80% value of what a non-IBM migration would get them by moving to IBM's product. For a lot of large, slow, conservative orgs, that's good enough.
- gridlockd 7y agoWhat laypeople need to realize is the following relation: Low federal funds rates allow companies to acquire huge amounts of debt very cheaply. Huge amounts of cheap debt allow companies to buy lots of stock, driving up prices. Stock prices inflated in such a way are not supported by fundamentals and so the downside risk greatly increases. Once the downside eventually materializes, markets drop violently. At first, the FED ignores this, but eventually it bails. The funds rate is once again lowered, so the game can continue. In any event, the game must continue, because companies need new debt to service old debt. If the new debt was more expensive, the companies would eventually risk defaulting. To understand the risk of corporate defaults, one must look at the importance of corporate bonds in pension funds. Ironically, the low federal funds rate is part of what drives pension funds to purchase more risky corporate debt, in order to meet their yield requirements. All of this causes massive asset price inflation. Stock prices are detached from actual revenue, real estate prices are detached from rent income. The rich are getting richer - at least on paper - because they own most of the assets. The CPI doesn't immediately reflect this kind of inflation, so the FED gets to claim "there is no inflation" and everything is "just fine". Well, it's not fine and they know it, they just can't really do anything about it.
- SpicyLemonZest 7y agoIt's hard for me to see why this dynamic would happen. What specific federal funds rate would make stock prices "supported by fundamentals" rather than "inflated", and why in your view can't the Fed just set that rate to avoid these problems?
- unimployed 7y agoBecause a mix of globalization, technological financialization, and perverse incentives. The markets have become increasingly global to the point that there is never a shortage of investors or investment capital. However, profitable, low or no risk investment opportunities do not grow on trees nearly as plentifully. Due to an overabundant supply of investors with a high demand to seek profitable low or no risk investment opportunities to park their wealth for growth via interest, and a much lower supply of profitable low or no risk investment opportunities—the interest rates to park your wealth must fall. And they have fallen quite steadily and predictably since their peak in the 1970s and 1980s... which nicely corresponds with the technological globalization and financialization of markets and marks their triumph over inflation (why inflation has not returned). There is another reason for inflated asset prices besides cheap interest rates. Many assets are also priced to interest rates in an inverted fashion (for bonds, that is exactly the formula how they work and are priced). Just before the recession, stock buy-backs were no longer prohibited and since the great recession and the ultra low interest rate environment coupled with stock buy-backs, stocks have become a slightly more risky alternative to bonds and stock prices became just as inflated as bonds and have more or less stayed that way. You see, when you have a combination of all those factors coupled with the ability to buy back your stock, stocks are now able to compete almost directly with bonds for investors and stock prices inflate accordingly. Because globalization, technology, and financialization happen much faster than markets and regulation can respond, and there are vested interests by investors (corporations, banks, Wall Street, etc.) to maintain the status quo via lobbying the politicians and regulators... the situation is unlikely to resolve itself via some self-regulating efficient market hypothesis.
- tonyedgecombe 7y agoThe big risk is that IBM drags Redhat down to their level. This wouldn't be unusual, most takeovers fail to deliver shareholder value.
- streetcat1 7y agoThere is nothing to drag. A single server distro is becoming irrelevant as the unit of computation resources is the kubernetes cluster. I.e. all the app see is a set of kubernetes nodes, it does not really care what server disto you are running on.
- orev 7y agoYou do realize that those containers eventually need to be hosted somewhere, right? That somewhere is a server running an operating system. Containers are more a threat to virtual machine OSes than ones that host containers.
- streetcat1 7y agoRight. All I need from a node is the CPU / Memory and a docker daemon. The less I know about an OS or any other services / patches, etc the better. I.e. I want my nodes to be cattles.
- beagle3 7y agoThe same mindset would dictate that you only ever buy no-name hardware which is about 30% cheaper than dell/hp for the same performance characteristics... why would anyone do that? And that's why people DO pay for red-hat. Peace of mind, whether supported by evidence or not.
- streetcat1 7y agoSo people pay for redhat because they did not move to container/ microservices architecture. Any main stream technology (Mainframe, Dec/Vax, PC, VM) will always have legacy customers. However, one the state of the art architecture is micro services, the optimal runtime is kuberentes. Once everyone is on kubernetes hardware will not matter. Moreover, I would love a cloud based on second hand hardware (which should be much cheaper than 30%).
- broknbottle 7y agoIBM missed a great marketing opportunity. They should have told the public that the decision to acquire Red Hat was made by Watson
- acdha 7y agoLying like that is a great way to have to deal with lawsuits from every investor who isn’t convinced that the deal is a good idea.
- mathattack 7y agoIt’s a little easier for them to just lie to customers.
- broknbottle 7y agoIt's not a lie if you believe it ;)
- acdha 7y agoIt is, however, if there’s documentation showing something else which comes up in discovery. Seriously, never try this.
- chipperyman573 7y agoI'm not sure if you're joking, but if you aren't that would be a pretty big risk. If it doesn't pay off they would look pretty bad for Watson
- thomasjames 7y agoIsn't Watson already a tired marketing device whose existence as a meaningful product/system is debatable? Not sure how much more damage would be done.
- scarejunba 7y agoHow is that marketing? That's just fraud.
- mathattack 7y agoA dying company trying to extend their “squeeze your base” policy to another vendor. I think they overpaid for RedHat. After a particularly painful audit at my Fortune 500, we kicked out RedHat. We spend more time talking to IBMs auditors than we do to their Salespeople and engineers. This merger seems like the modern version of HP and Compaq. The only winners are the shareholders who bolt early. Customers, employees and late shareholders are all losers.
- riffraff 7y agoForgive my ignorance,but what is an IBM auditor?
- sharpneli 7y agohttps://ibmaudits.com/ibm_faq/ https://ibmaudits.com/ibm_faq/ Read and despair. tl;dr: They dig around to see you’re paying the correct license fees. They’re common and expensive enough that law firms offer special counseling explicitly for that.
- garmaine 7y agoWtf. Ok thanks for posting. I will never use any RedHat product ever again.
- freehunter 7y agoThe alternative is paying for the software you're using. If you don't want to pay for for-pay software, there's plenty of no-cost Linux distros available.
- philjohn 7y agoThe problem with these audits is that the exact licensing conditions can be vague, or the audit points to something that is in compliance, but might not be (e.g. you're licensed for 8 cores, but your replacement servers have 12 cores, you still only need the 8 cores so you disable 4 cores in the bios ... well, they will say, for all we know you only disabled those cores when we came to do the audit ... so now you owe us the money for 4 extra cores at full list price, going back 18 months).
- bluedino 7y agoSo when IBM is desperate for cash in a few years, who buys Red Hat? Microsoft? Tencent? Dell? gulp Oracle?
- zepearl 7y agoWhat about "Suse"? ( https://en.wikipedia.org/wiki/SUSE https://en.wikipedia.org/wiki/SUSE ) I understood that it's often used in corporations as an alternative for RedHat => maybe Suse will have to merge as well with some other company if the combo RedHat&IBM in/directly shrink their revenues? E.g. maybe Suse will be excluded from IBM's support? ( https://www.suse.com/partners/alliance/ibm/ https://www.suse.com/partners/alliance/ibm/ )
- strenholme 7y agoI miss the old IBM Thinkpads; sure, they cost $4,000 during the height of the dot-com boom, but those things were built like tanks. I got a 600X when a dot-com was liquidating its assets for $700 and it was my primary computer for over six years. The newer Thinkpads from Lenovo are more like wannabe Macbooks; I miss batteries you could swap out without opening the computer and Thinkpads you could open without using a spudger.
- H8crilA 7y agoPSA: If you want exposure in your portfolio to the M&A market there's an ETF that does it: https://www.etf.com/MNA https://www.etf.com/MNA It's perhaps the single biggest "alternative" strategy ETF.
- downrightmike 7y agoYTD isn't even 1%, almost anything else has done better.
- H8crilA 7y agoIt's an alternative strategy, meaning it tries to be decorrelated with anything else. It may be useful if you want a balanced portfolio, not just a 100% stocks bomb. Historical yield is not everything. Things change, past performance is not necessarily a predictor of future success.
- mruts 7y agoI mean SPY has returned like 3% YTD. But that’s not really the point. M&A has zero to very low Beta exposure, so it’s almost completely uncorrelated to the market. This, in general, is a good thing. A lot of quant market neutral hedge funds only return 3-5% per year. Compared to the S&P, this looks pretty bad. But the goal of these funds isn’t to provide the best returns, it is to provide the best risk adjusted returns. You may ask, why would I care about that? The answer is that you can synthetically match any return by either buying or selling (borrowing) at the risk free rate. So if I had a fund that had returns of 4% and volatility of 2%, I could turn it into 2 and 1, 8 and 2, or 16 and 4, or whatever.
- RickJWagner 7y ago" leaving it with only $12 billion in cash." " But IBM’s dividend was hiked only 3.2% this year" Sounds like a first-world financial scenario, no?
- Rapzid 7y ago> On July 9, IBM closed on its $34 billion purchase of Red Hat, a Linux software operating system mainly used by cloud operators. Completely conflates Red Hat with RHEL and makes it sound like IBM purchased a linux distro for 34b.
- mkhalil 7y agoI remember when 3x yearly revenue was the proper purchase price for a an established business like this. 10x huh? Glad, I am not in IBM. But wish the best of luck
- OrgNet 7y agoWhat does that mean for Fedora?
- mikhailfranco 7y agoDebt should not be a tax deductible expense. Simple.