IBM Acquires HashiCorp for $6.4 Billion
IBM has announced its intent to acquire cloud software maker HashiCorp for $35 per share in cash, valuing the deal at $6.4 billion net of cash. The acquisition is expected to close by the end of 2024 and will complement IBM’s existing portfolio of software solutions, including Red Hat, which has contributed to the company’s revenue growth since its acquisition in 2019.
IBM’s First-Quarter Revenue Falls Short
In its earnings report, IBM reported first-quarter revenue of $14.46 billion, slightly below the $14.55 billion expected by analysts. This marks the third revenue miss in the past five quarters for the company. Revenue from software, a key growth area for IBM, came in at $5.90 billion, also below analysts’ expectations. Consulting revenue declined slightly to $5.19 billion, while infrastructure revenue totaled $3.08 billion. IBM attributed the revenue shortfall to a slowdown in its consulting business and macroeconomic headwinds.
IBM’s Growth Strategy
Despite the revenue miss, IBM emphasized its commitment to executing its growth strategy, which includes investing in key areas such as cloud computing, artificial intelligence, and hybrid cloud. The company recently announced plans to provide its 160,000 consultants with artificial intelligence assistants to boost productivity. IBM also completed the divestiture of The Weather Company to Francisco Partners during the quarter.
Investor Reaction
Notwithstanding the after-hours decline in share price, IBM shares are still up about 13% year-to-date, outperforming the S&P 500 index, which is up 6% over the same period. Analysts will be discussing the report with IBM executives on a conference call later today.
This news is still developing, and we will provide updates as they become available.
