Broadcom · CA Technologies · GitHub · IBM · Mergers And Aquisitions · Microsoft · RedHat

Mergers and Acquisitions 2018: Technology Sector

This year has been a huge year for technology companies in the merger and acquisition space. You probably heard of the most recent one with IBM buying the open-source giant Red Hat a couple weeks ago. I honestly feel like $32 billion is a lot of money for anything, and if IBM had that money to spend, they made a halfway decent choice by purchasing RedHat. I, however, feel like this was probably one of the most insane things ever to come across my timeline. Reason being, I’m a developer and I recognize that opensource software is a huge reason we have gotten to this point in technological advancements in the first place. By giving these precious keys to a company like IBM, which values proprietary software and services, I don’t know how well that meshes. I really just hope this purchase does not stifle progress or development RedHat has made/is making in the opensource community and in the cloud.

In fact, I think this purchase was made in order to try to keep up with the growth juggernauts (ie. Google, Amazon, Apple). In my head, they look like the Wizards picking up Michael Jordan in an era where Kobe, Shaq, AI, and Tim Duncan were the new dominant figures of the NBA. By this I mean, there is no way to disregard IBM’s contributions to the IT world we live in today, but there are new businesses that will make their return to elite status (in the stock market) a much harder feat now than ever before. But desperate times cause for desperate measures…and this purchase of RedHat could be the desperate thing that can change the trajectory of the company from barely making earnings and losing revenue, to being profitable again.

Shifting gears to Microsoft and GitHub. I actually like this purchase. This deal seems a lot more thought out in the way these two companies plan to work together. I think these two companies can leverage their existing capabilities in parallel to enable their customers, who just so happen to be software developers. GitHub is a developers playground to learn, build with others and it’s a great community that now has access to the Microsoft toolset, including Azure. I think this actually propels development to an even faster pace as more developers are able to take their projects from idea to end users using one platform. Previously, we would have to patchwork a couple of different tools to get from design to functional website. The time savings on how to integrate multiple tools together alone is probably the most appealing thing to developers. I think there are still some developers who are skeptical of how Microsoft will take over GitHub and somehow diminish it, but I don’t think it will. At this point, I must remind you that Microsoft purchased LinkedIn back in 2016 and has seen pretty significant revenue growth since the purchase. My hope is this match pans out for developers and investors sake. Disclaimer: I own shares of Microsoft

And the last merger I want to share about is the Broadcom purchase of CA Technologies…that no one saw coming. And I mean NO ONE! On the surface, these companies couldn’t be more different. Broadcom creates chips and CA Technology is a software company that specializes in software to help maintain Mainframe systems. Apparently, Broadcom most values the customer base of CA. Not just the case, but the people/business network that CA has developed over the years by developing tools that support mission-critical applications. I guess this is an instance of who you know and not necessarily about what you know.

But I’ve been long winded enough for this topic. I could go on and on, but I’ll leave it here. Until next post…

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