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IBM to Acquire Red Hat for 63% Premium, Plus More Q3 Earnings
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Monday, October 29, 2018
Data processing firm Red Hat shares are up nearly 50% at this hour of today’s pre-market upon the announcement that it has agreed to be acquired by IBM (IBM - Free Report) for $34 billion. The deal between these two long-term partners comes at a 63% premium on Red Hat shares, with the goal, according to IBM CEO Ginni Rometty, is to make IBM the #1 hybrid cloud provider.
IBM has fallen behind its mega-tech peers in recent times, as its forays into Watson technologies went from IBM leading the market in “smart” tech to being an also-ran in just a few short years. Such is the pace of technological development in the current era. With Red Hat’s synergies, IBM believes it can fast-track its growth in the hybrid cloud space. IBM shares are down nearly 20% year to date, including another 5% drop upon this acquisition announcement.
Personal Income and Spending for September brought modestly positive numbers early this Monday morning, with Income missing estimates by 20 basis points to +0.2%, also lower than the upwardly revised read from the previous month of +0.4%. Consumer Spending stayed strong, up 0.4% and still a notch below the upwardly-revised 0.5% from August.
Core Inflation double expectations to +0.2% last month, and up from the 0.0% we saw in August. Following Friday’s initial read on Q3 GDP coming in less than robust beneath the headline +3.5%, we had been on the lookout for spots of weakness in economic data that may cause the Fed to re-think raising interest rates at its upcoming December meeting. We see no such weakness in this data.
This is also another big week for Q3 earnings results, with expected reports later this week from Apple (AAPL - Free Report) , Facebook and others. Ahead of today’s opening bell, we see several more results, including:
Cooper Tire & Rubber reported a mixed Q3 today, with a big beat on the bottom line — $1.07 per share versus 45 cents expected (though down from $1.18 per share in the year-ago quarter) — but a 1.3% miss on the top, to $733.8 million in quarterly sales. The Zacks Rank #3 company currently trades at multi-year lows. For more on CTB’s earnings, click here.
ON Semiconductor (ON - Free Report) outperformed estimates on both top and bottom lines this morning, posting 57 cents per share which beat the Zacks consensus by 7 cents, on $1.54 billion in sales which beat analysts’ expectations by 2%. Shares are up nearly 9.8% following the earnings report, but the stock is still down more than 20% year to date. For more on ON’s earnings, click here.
And auto industry supplier Dana Inc. (DAN - Free Report) posted an impressive Q3 earnings report, topping earnings projections by 3 cents to 77 cents per share, while revenues of $1.98 billion amounted to a 3.7% beat on the company’s top line, and well above the $1.83 billion the company reported in the year-ago quarter. Shares are still way down from the start of 2018, however. For more on DAN’s earnings, click here.
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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IBM to Acquire Red Hat for 63% Premium, Plus More Q3 Earnings
Monday, October 29, 2018
Data processing firm Red Hat shares are up nearly 50% at this hour of today’s pre-market upon the announcement that it has agreed to be acquired by IBM (IBM - Free Report) for $34 billion. The deal between these two long-term partners comes at a 63% premium on Red Hat shares, with the goal, according to IBM CEO Ginni Rometty, is to make IBM the #1 hybrid cloud provider.
IBM has fallen behind its mega-tech peers in recent times, as its forays into Watson technologies went from IBM leading the market in “smart” tech to being an also-ran in just a few short years. Such is the pace of technological development in the current era. With Red Hat’s synergies, IBM believes it can fast-track its growth in the hybrid cloud space. IBM shares are down nearly 20% year to date, including another 5% drop upon this acquisition announcement.
Personal Income and Spending for September brought modestly positive numbers early this Monday morning, with Income missing estimates by 20 basis points to +0.2%, also lower than the upwardly revised read from the previous month of +0.4%. Consumer Spending stayed strong, up 0.4% and still a notch below the upwardly-revised 0.5% from August.
Core Inflation double expectations to +0.2% last month, and up from the 0.0% we saw in August. Following Friday’s initial read on Q3 GDP coming in less than robust beneath the headline +3.5%, we had been on the lookout for spots of weakness in economic data that may cause the Fed to re-think raising interest rates at its upcoming December meeting. We see no such weakness in this data.
This is also another big week for Q3 earnings results, with expected reports later this week from Apple (AAPL - Free Report) , Facebook and others. Ahead of today’s opening bell, we see several more results, including:
Cooper Tire & Rubber reported a mixed Q3 today, with a big beat on the bottom line — $1.07 per share versus 45 cents expected (though down from $1.18 per share in the year-ago quarter) — but a 1.3% miss on the top, to $733.8 million in quarterly sales. The Zacks Rank #3 company currently trades at multi-year lows. For more on CTB’s earnings, click here.
ON Semiconductor (ON - Free Report) outperformed estimates on both top and bottom lines this morning, posting 57 cents per share which beat the Zacks consensus by 7 cents, on $1.54 billion in sales which beat analysts’ expectations by 2%. Shares are up nearly 9.8% following the earnings report, but the stock is still down more than 20% year to date. For more on ON’s earnings, click here.
And auto industry supplier Dana Inc. (DAN - Free Report) posted an impressive Q3 earnings report, topping earnings projections by 3 cents to 77 cents per share, while revenues of $1.98 billion amounted to a 3.7% beat on the company’s top line, and well above the $1.83 billion the company reported in the year-ago quarter. Shares are still way down from the start of 2018, however. For more on DAN’s earnings, click here.
Mark Vickery
Senior Editor
Questions or comments about this article and/or its author? Click here>>
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It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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