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IBM buys Hashi for $6.4B, expects software business and Red Hat enhancement

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IBM buys Hashi expects software business Red Hat enhancement

With the announcement that it would pay $6.4 billion to acquire Hashi, IBM claimed the acquisition would lead to a diverse range of products for its hybrid cloud platform.

Arvind Krishna, CEO of IBM, says that businesses are struggling to manage complex technology systems that include multiple clouds, on-premises settings, and applications. By adding Hashi's infrastructure management products to IBM's existing Red Hat lineup, the IT giant will be better equipped to support clients in making necessary adjustments. Furthermore, Krishna emphasized that in 2024, Hashi will enable IBM to assist clients in integrating generative AI applications. He also thinks that Hashi's security products are not worth as much as they should be. That's why the company they bought will stay with IBM's software division instead of going to Red Hat.

CFO Jim Kavanaugh briefly explained how IBM plans to use Hashi's products during the company's Q1 2024 earnings call. Ansible Automation and Terraform's automation will simplify application provisioning and configuration across hybrid cloud environments.

Kavanaugh said that only 20% of Forbes Global 2000 are users, while 75% of Hashi's clients earn over $100,000 in annual recurring income. Additionally, he noted that 70% of the company's revenue originates from the US. The CFO believes that growth potential is evident due to IBM's extensive worldwide reach and position in numerous massive industries.

IBM expects consistent revenue growth in line with its mid-single digit model and requires opportunities to achieve this.

However, Q1 2024 revenue of $14.5 billion represented a mere 1% or 3% increase in constant currency. In constant currency, software sales increased by 6%, but consultancy revenue increased by just 2%, and infrastructure revenue remained unchanged.

The $1.6 billion in net income represented a $670 million increase over the same time in 2023.

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