Memo re Red Hat

Your old pal Deep Throat here. I decided to add a few words re Red Hat revenue after our CEO made these remarks the other week.

"“This year it will be over $5 billion,” IBM CEO Arvind Krishna told analysts on Thursday at the Annual Bernstein Strategic Decisions Conference.

“So if you can maintain the growth, it actually becomes a bigger and bigger contributor to what goes forward in addition to the synergistic growth in other parts of the business,” Krishna said."

To be honest this was a shock to me. For some time now I have commented on the 5b run rate, which is all fine and good, except we paid a cazzillion dollars for it.

Second, the growth on average is 17%, so sure, 17% of a larger number would be wonderful, but in the scheme of things, compared to AWS, MSFT etc, it just leaves us further behind in terms of growth.

Krishna's point about synergy is a good one.

So why was yours truly DT shocked? It's simple. Here was our CEO acknowledging that we will hit 5b this year. Not 10b in two years or 15b in five years. All that effort. All that money. And still growth that leaves us floundering.

Just an observation as I sip my Remy Martin

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I keep waiting for the last DT news to actually happen and it hasn't. Starting to think this is some clown who's bored at work.

Just curious... how much actual Linux kernel dev goes on at RH?

Wondering how hard it would be to study up on the kernel and do kernel dev?

IBM - dead man walking. Get out while you can folks.

I had always thought the sole purpose of the RH deal was to juice up the stock price to give Rometty a chance to exit stage right. The fact that she grasped the chance to do so, and the senior exec who architected it was named her successor simply confirmed it. This $100B business is just a big plate for a cesspool of execs to feast on. If you can get some bread crumbs, gobble them down fast. If you can't, better leave now. It ain't gonna last long.

wouldn't trust the RH Revenue $ or growth rates being reported. They very likely have included a lot of non RH "stuff" in there

If true, this will come to bite them in future quarters - you can stick stuff in there and it looks like growth one time, but now those assets are in there, not growing, and the next Qs growth won't look like it has the same growth.

I wouldn't trust the RH Revenue $ or growth rates being reported. They very likely have included a lot of non RH "stuff" in there just like with "Cloud", "Watson", "CAMSS", "Strategic Imperatives", "Smarter Planet", etc. before that.

Hey DT, do you have any information about the sale of Watson Health? Will they sell or just destroy it.

IBM is a financial engineering machine. It's a great place to rest your old bones.. those guys over at AWS are getting whipped until they cry for more. At least, they're going places.

Yes. IBM needs to reinvest the dividend money. They don't know what it takes to scale into a platform company focused on growth. The dividend plus incompetent management will be the death of the company.

Company DIV. REV MULT
IBM 4.5% 1.76X
MSFT. .9%. 11.57X
ORCL. 1.6%. 5.89X
AMAZ 0.0% 6.26%
GOOGL 0.0%. 8.90X

The end of IBM... a slow and painful death...

Not sure why anyone would be shocked about lack of acceleration/contribution. I sat through a bunch of initial sessions after RedHat was acquired, only to realize that this revenue would not backfill an increasing ho-e, nor did we have the products or services to enable acceleration. DT, you know your stuff based on my long term career at IBM. Thanks for stepping forward.

More on the same at this post here -- @OP+1bemIXY4

Thread regarding IBM layoffs

Memo re Red Hat

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