IBM revealed that it would pay $4.6 billion to Vista Equity Partners to buy the software business Apptio.The business said that IBM's investment in AI and IT automation software is being continued with the purchase of Apptio, which provides financial and operational IT monitoring and optimisation solutions. Apptio will help IBM develop its application management, optimisation, and observability solutions, the company claimed in a release.
Based on Reuters, Apptio’s revenue is about $233m in 2018, and an annual compound of 10% would lead to an estimated revenue of slightly more than $300m. IBM has paid for 15 times Price to Sales Ratio for Apptio’s business, and it seems to be an overpayment given that their revenue generation is only $300m. Furthermore, it is not disclosed on whether Apptio is profitable and generating free cash flow. For comparison, PE firm Vista Equity Partners agreed to acquire Apptio for $1.94 billion in 2018, and IBM has paid for more than twice of that amount in the span of 5 years. This would amount to 1-2% of IBM’s market cap which shows that the acquisition is slightly material to business, especially since it is an all-cash acquisition.
Considering that it is an all-cash acquisition by IBM, it makes one wonder whether the cash could have been put to better use, instead of overpaying for Apptio. Nevertheless, the CEO of IBM believes that Apptio's offerings combined with IBM's IT automation software and watsonx AI platform, gives clients the most comprehensive approach to optimize and manage all of their technology investments.
Historically, IBM does not have a good track record of their acquisitions. An example would be their acquisition of Weather Co for $2bn in 2015. Currently, there are rumours that IBM is looking to sell their Weather business, with an estimated valuation of $1bn. This leads to a negative loss of $1bn, and it also shows that the acquisition did not went well.
https://www.cnbc.com/2023/06/26/ibm-to-acquire-software-company-apptio-for-4point6-billion.html
[link] [comments] https://www.reddit.com/r/stocks/comments/14qkc5j/ibm_acquisiation_of_apptio/
Ak chcete pridať komentár, prihláste sa
Ostatné príspevky v tejto skupine
Please use this thread to discuss your portfolio, learn of other stock tickers, and help out users by giving constructive criticism.
Why quarterly? Public comp
When you sell a stock to buy another stock, do you prefer to set the estimated amount of the capital gains taxes aside in a money market or do you think it better to
Saving for retirement is crucial, but relying solely on a 401(k) might not be enough due to high inflation. Consider investing in growth stocks, especially in the tec
I’m think this is not a good investment as there is no chatter at all on the 52 week low. They are involved in a class action lawsuits by investors and credit card co
Sorry if this is the wrong sub. Let’s say I had $1 million in VOO but I wanted to sell half of it to buy SCHD. It would suck to pay taxes on $500k. So how would you g
Hey guys, I did a deep dive into Crocs. In this analysis, I will do a brief breakdown of the company and go over some quantitative data, qualitative data and estimate
