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Engulf And Devour...Then Choke

"Red Hat also managed to boost revenue by persuading existing customers to expand the size of their contracts. The value of the 25-largest renewal subscriptions signed during the quarter was 32 percent higher than the original deals as customers expanded capacity and added new features."

That's a report on Wednesday from Reuters about Red Hat and its better than expected fourth quarter earnings.  On Thursday, Citigroup said that Red Hat is a "tempting acquisition target."

Are these people stupid or what?

1)  Red Hat won't sell itself.  They have grown their business and have innovators on staff.  There is nothing they can gain by becoming someone else's property.

2)  Stock takeover?  Possible, sure, happens all the time like with Eidos.  However, if Citigroup doesn't understand the GPL, all the talent that makes Red Hat what it is will simply pack up and leave, founding a new Red Hat and taking all their goodwill with them.  And, thanks to the beauty of Open Source, it will be nothing for people to switch their aps from Red Hat or Fedora to this new company if Citigroup doesn't get it.

3)  Thinking that companies just make money is a mistake, like how Transamerica bought United Artists, thinking that movies would yield tons of cash and glamour with little effort.  If Citigroup isn't bothering to do the research, they're in for a very harsh lesson about how just because something makes money doesn't mean it's effortless.

I don't see the takeover happening, because Citigroup would be stuck with an empty shell.  Oracle couldn't get Red Hat, and they're operating in the black without government bailout funds.  Citigroup doesn't have a chance.

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