The investors call just finished. The summary boils down to IBM has changed strategy to redhat’s, built around OpenShift and openStack. IBM will focus on building services around these going forward with their “extensive services” operations. The focus will be on the top 2000 customers worldwide. If you do not fit into this go to market strategy, your IBM opportunities may be limited. Free cash flow remains the same, and buybacks will stay suspended for 2 years to pay down debt. IBM expects a return to pre-Redhat financial conditions by the end of 2021. Dividend expansion (BAU) is expected
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I believe page 45 explains the charges IBM is taking. FASB is making them do that. Here is the entire presentation
https://www.ibm.com/investor/att/pdf/ibm-2019-investor-briefing-presentation.pdf
Prior to Red Hat, IBM was forecasting $13.90 EPS for the year, this announcement lowers that to $12.80. Since Red Hat was generating over $430M in Net Income pre acquisition, how is it that the new combined earnings will not only be lower than the sum of the two companies' earnings but also less than IBM was forecasting pre RH? Must be the new math.
Hmm ... sounds like an excellent plan. What could go wrong?
A gold summary
Sounds like a roadmap to an early grave. Good job!