Executive Summary

On August 2, 2019, IBM held an investor briefing to detail plans for its acquisition of Red Hat and provide a guidance update.

• IBM has transformed its software to be cloud-native and run on any cloud platform by leveraging the technology of recently acquired Red Hat.
• The company stated that enterprises can build mission-critical applications and run them on all leading public or private cloud platforms.
• IBM also announced the availability of its OpenShift foundation for building containerized applications on IBM Cloud, IBM Z and LinuxONE, in addition to related consulting and technology services for Red Hat.
• IBM expects the acquisition to add 200 bps to revenue growth over the next five years, but to also dilute 2019 EPS to at least $12.80 from at least $13.90 previously, to be less dilutive in 2020 and be accretive to operating EPS in 2021.