In a strategic move, International Business Machines (IBM) has announced the acquisition of HashiCorp for $6.4 billion. This acquisition is expected to enhance IBM’s cloud-based software offerings, tapping into the surge in demand for AI-powered technologies. Software revenue has been a bright spot for IBM, providing balance amidst cautious spending in its consulting business due to rising interest rates. IBM will acquire HashiCorp for $35 per share, representing a premium of 42.6% over Monday’s closing price. The acquisition underscores IBM’s commitment to bolstering its cloud business, recognizing the growing necessity for storing and processing the massive amounts of data utilized in AI programs. IBM’s AI-related revenue surpassed $1 billion in the first quarter, demonstrating sequential growth. HashiCorp, headquartered in California, specializes in enabling customers to establish and manage their infrastructures on the cloud. According to Stephen Elliot, a vice president at International Data Corp, the acquisition will provide IBM with a growth engine for cloud infrastructure automation. Elliot also highlighted the complementary nature of this deal with IBM’s Red Hat business. While software revenue grew by 5.5% in the first quarter, the consulting segment remained flat. Total revenue reached $14.46 billion, slightly below analyst estimates of $14.55 billion. IBM’s CFO, Jim Kavanaugh, acknowledged that clients are tightening their discretionary spending due to economic uncertainties. Accenture had previously reduced its revenue forecast for fiscal-year 2024 due to clients curbing spending on consulting services. Despite these headwinds, IBM reported adjusted earnings of $1.68 per share for the quarter ended March, exceeding analysts’ expectations of $1.60.
IBM Acquires HashiCorp for $6.4 Billion, Boosting Cloud Software Offerings Amid AI Boom
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