After a year of planning, finally, IBM has acquired the American multinational software company Red Hat that provides open-source software products and solutions to the enterprise community. The deal was finalized at a whopping amount of $34 billion, making it IBM’s biggest and most expensive purchase ever. They acquired all the issued and outstanding shares of the company for $190 per share.
On top of this, the computer company is looking to bring in more revenue by using this acquisition to bring coded applications onto a cloud for public use. We are not sure if they’ll be using Amazon Web Services, Microsoft’s Azure, or IBM’s own cloud services. IBM is working on a blockchain and is fairly prevalent in the decentralized space, so this tech may run on a blockchain network as well.
IBM has lowered its earnings forecast for the year because of the Red Hat acquisition, which leads to an adjustment of $2.2 billion purchase-accounting changes to record a deferred revenue at face value. This will also mark the retention of payments along with the early ending of IBM’s share buyback.
In the previous guidance report, they were expecting at least $13.90 earnings per share, but now with the lowering, this has gone down to $12.80 per share. IBM’s shares showed a rise on Friday when the new guidance was released, but sooner they lost the gains and closed down 2%.
