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The high price paid by IBM to the Red Hat software group allowed its shares to fall by 5% early Monday, as investors worried about the premium offered by the pioneer of the company. 39; computer.
The announced price of $ 34 billion on Sunday night, the closing price was 63% higher than Red Hat's closing price on Friday, and this morning's sale put IBM at risk for its third biggest drop this year .
The buyout is part of IBM's search for new sources of revenue, while growth slowed and equities struggled to regain the momentum gained for the last time in 2016.
Although badysts are aware, Ginni Rometty, general manager of IBM, is employing to reorganize the company, the size of the operation – the largest in its history – taken by surprise . This transaction is close to $ 5 billion in 2007.
"While we expected a significant type of strategic change in the near term, we were not expecting an acquisition of this magnitude. perhaps the recent market volatility has created an opportunity, "said David Grossman, badyst at Stifel.
IBM rebadured investors that it would not change its dividends, but would suspend its share buyback program for 2020 and 2021.
"The purchase is strategically driven which should be considered favorably. That said, the relative size of the transaction and the additional leverage will likely raise concerns, as well as the timing, "Grossman added.
Nomura badyst Jeffrey Kvaal said the premium paid for Red Hat was "grossly rich," but added that the IBM sales multiple was lower than the Microsoft GitHub transaction or the acquisition of Mulesoft by Salesforce. the decline in the price of Red Hat shares further increases the premium.
"The agreement is expensive. However, we think it works both financially and strategically, "he said. "It's as transformative as it is for IBM."
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On Monday, Ms. Rometty tried to position this agreement as the beginning of a new phase of growth for IBM, which was shrinking for almost seven years. years at the helm.
"It's all about growth," she said in a telephone conversation with badysts. IBM's revenues fell again in the last quarter, ending a short-term recovery, with growth in more recent companies such as Watson's artificial intelligence technology being overwhelmed by the downturn in its traditional IT business.
Ms. Rometty also sought to get rid of the defensive spirit that had developed on Big Blue, the new cloud computing platforms such as those run by Amazon and Microsoft have become key pieces. of the information technology market.
She added that by buying Red Hat, IBM would have a stronger alternative by combining existing data centers of its customers with new cloud services, using an approach called "hybrid cloud." .
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