Weekly Edition
Return to the Press page
| |||||||||||||
Linux maker a "tempting" takeover target (Reuters)
Reuters reports that Red Hat Inc. is ripe for a corporate acquisition.
"Citigroup said Red Hat Inc, which posted strong quarterly results on Wednesday, is a potential takeover target as the Linux software maker's strategy attracts the attention of larger technology firms.
Citigroup and RBC Capital raised their price targets on Red Hat, which also forecast full-year results in line with market estimates.
"We believe Red Hat is a tempting acquisition target," Citigroup analyst Brent Thill wrote in a note to clients."
(Log in to post comments)
Linux maker a "tempting" takeover target (Reuters) Posted Mar 26, 2009 17:39 UTC (Thu) by pr1268 (subscriber, #24648) [Link] Just who, might I ask, would be the acquirer? (The article didn't mention any suggestions.)
Linux maker a "tempting" takeover target (Reuters) Posted Mar 26, 2009 17:44 UTC (Thu) by mosfet (guest, #45339) [Link]
This german article says Oracle is interested:
http://www.heise.de/newsticker/Oracle-will-angeblich-Red-...
Linux maker a "tempting" takeover target (Reuters) Posted Mar 26, 2009 18:02 UTC (Thu) by brouhaha (subscriber, #1698) [Link] Ugh! I sure hope not.I'd rather see Red Hat remain independent, but if they get acquired, I think there are only a few potential parent companies that wouldn't completely screw everything up, and Oracle isn't one of them.
Linux maker a "tempting" takeover target (Reuters) Posted Mar 26, 2009 18:18 UTC (Thu) by smoogen (subscriber, #97) [Link]
That would be a horrible decision on both Oracle and Red Hat's stock holders. The Oracle culture and Red Hat culture's are diametrically opposed. Mixing them would result in a lot of backlash from both companies and yet another failed technology merger.
Linux maker a "tempting" takeover target (Reuters) Posted Mar 26, 2009 18:03 UTC (Thu) by flewellyn (subscriber, #5047) [Link]
Yes, but is Red Hat interested in being bought? And if they're not, is enough of their stock publically traded in order for a hostile takeover to be possible?
Linux maker a "tempting" takeover target (Reuters) Posted Mar 26, 2009 18:13 UTC (Thu) by agrover (subscriber, #55381) [Link]
if they don't want to be bought, just add some zeros at the end of the offer :)
Linux maker a "tempting" takeover target (Reuters) Posted Mar 26, 2009 18:23 UTC (Thu) by flewellyn (subscriber, #5047) [Link]
Perhaps, but there's only so many zeroes to add before the takeover would no longer be viable for the buyer.
Which is why I was asking about hostile takover possibilities.
Hostile takeovers of software companies don't work Posted Mar 27, 2009 3:21 UTC (Fri) by JoeBuck (subscriber, #2330) [Link] It's bad enough trying to take over a proprietary software company (unless the purpose of the takeover is to destroy a competitor, which Oracle has done in the past). And it's much worse for a free software company.After all, the talent goes out the door every night, and they can head back into a different door. Furthermore, since the software is GPLed, and the patent promises Red Hat already made would remain binding, just what would Oracle own? As far as I can tell, they'd own the obligation to support all the existing Red Hat customers, and no way to stop ex-employees from starting Blue Scarf or Green Glove.
Hostile takeovers of software companies don't work Posted Mar 27, 2009 3:33 UTC (Fri) by flewellyn (subscriber, #5047) [Link]
I didn't say it was a good idea. Just said that I was concerned about it.
Hostile takeovers of software companies don't work Posted Apr 3, 2009 15:13 UTC (Fri) by Oddscurity (guest, #46851) [Link]
Black Belt?
At the very least they could start a business supporting CentOS, and work from there to make that the de-facto RHEL.
Linux maker a "tempting" takeover target (Reuters) Posted Mar 26, 2009 18:47 UTC (Thu) by iabervon (subscriber, #722) [Link]
As far as I can tell, analysts these days are calling companies "takeover targets" as a way of saying their stock is currently a good long-term value without actually giving advice (at a time when short-term price fluctuations are likely to make the advice look foolish within the time span in which investors remember where they heard about the stock).
The point is that the stock is trading for less than it should be, given projected future earnings. But there's a reasonable chance that the imbalance will just increase, which means that someone who invests because of this imbalance could lose anyway. On the other hand, a company could buy Red Hat for the future earnings and not care how the market would value Red Hat at that point.
Linux maker a "tempting" takeover target (Reuters) Posted Mar 26, 2009 18:21 UTC (Thu) by ehovland (subscriber, #2284) [Link]
My first thought is "Who in their right mind would still listen to a Citigroup employee about the market?"
I heard the IBM/Sun merger. I happen to think that Red Hat and IBM are more likely. Even so, in this economic climate a merger w/out easy financing is going to be quite a trick.
Linux maker a "tempting" takeover target (Reuters) Posted Mar 27, 2009 3:25 UTC (Fri) by JoeBuck (subscriber, #2330) [Link] In the case of Sun/IBM, we know that there are actual talks going on. That doesn't mean that a deal will be made, but it's serious. Oracle/Red Hat on the other hand is some analyst's speculation.
Even more interesting takeover target... Posted Mar 26, 2009 18:49 UTC (Thu) by DeletedUser32991 ((unknown), #32991) [Link]
...Novell. Comes at half the price of Red Hat, has shown that it is flexible when it comes to partnering.
(These 10 seconds research into market cap will pay off if enough people believe it.)
Takeovers and Fedora Posted Mar 26, 2009 20:56 UTC (Thu) by freemars (subscriber, #4235) [Link]
If Red Hat is taken over by some company that doesn't grok open source, will there be an exodus from Fedora? I don't use Fedora but I would hate to see the Fedora community broken up thanks to Wall Street.
So buy some stock Posted Mar 26, 2009 21:22 UTC (Thu) by dmarti (subscriber, #11625) [Link] Then call your broker and buy some RHT. You can vote your shares against the acquisition, or at the very least help drive the price up to make it a less tempting target. (In the long run, an REI-style buyers' co-op makes better sense as an ownership structure for a software company than going public, anyway.)
So buy some stock Posted Mar 27, 2009 6:39 UTC (Fri) by rahvin (subscriber, #16953) [Link]
What? I hope you were kidding with that "buyers coop" comment and I just missed the intended humor. Because otherwise I would likely say something inappropriate about your intelligence level.
On a more serious note, there are certain market segments, particularly cost+fee engineering where a large number of companies are employee owned. I've always felt that OSS software was another ideal environment for this little bit of socialism in business. There are huge numbers of advantages to employee ownership, particularly CEO salaries stay quite reasonable, and in market segments where the vast majority of employee owners are intelligent enough to understand the investment and practice without the blow your load mentality of wall street.
I find it interesting that there aren't more employee owned companies in FOSS. I wonder if it's couldn't be attributed to greed or a desire to someday sell the company and get rich, whereas employee ownership almost guarantees this won't happen as the employees will be more interested in keeping their jobs than selling out for a few cents. Why aren't more FOSS companies employee owned?
What's bad about customer co-ops? Posted Mar 27, 2009 12:40 UTC (Fri) by sdalley (subscriber, #18550) [Link]
Colour me stupid, but, what's so bad about a customers/staff co-op company, again? REI seem OK, and here in the UK John Lewis Partnership are doing OK too. Or, was it something about an implied buyers coop/chicken coop???
Words is funny things, too often we are divided by the barrier of a common language ...
What's bad about customer co-ops? Posted Mar 27, 2009 17:19 UTC (Fri) by dmarti (subscriber, #11625) [Link] You could also reverse split the stock to get a price of a few grand per share, and issue one subscription per share as a stockholder perk through the Investor Relations dept. Then you end up with people buying the share to get the software, and ownership dispersed among lots of actual users instead of coke-addled mutual fund managers. At some point you have enough of your ownership run this way that you can vote to adopt co-op status and stop filing all that expensive SEC paperwork.
What's bad about customer co-ops? Posted Mar 27, 2009 19:13 UTC (Fri) by donbarry (guest, #10485) [Link]
REI? Bad example. About fifteen years ago, someone ran for the board
as a petition candidate (at the time, it took signatures numbering 0.5% of votes in the previous election, or around 400ish). He won. The board immediately changed the rules to require petition candidates get 1% of the total membership (i.e., around 30,000). Since then, each and every election has had "vote for four of the following four candidates" selected by the nominating committee. And every candidate is a lawyer or finance type, generally sitting on several other interlocking boards. With that devolution, the culture of REI stores has changed from the previous "work as an expert for life" to part-time employment for outdoorsy types who want to get the internal discounts, and the stores themselves have changed from specialist outdoors outfitters stores containing hard-to-find expedition gear to mainstream-marketed gear to dress up well-to-do college kids in outdoorsy looking junk.
That's the problem when you let serial "entrepreneurs" take over. It stops being about a mission and starts being about the bottom line. REI is a coop now in name only.
So buy some stock Posted Mar 27, 2009 22:10 UTC (Fri) by sbergman27 (guest, #10767) [Link]
"""
Then call your broker and buy some RHT. """
Or throw your support behind a true community oriented distro which is not encumbered by being an extention of a publically traded company. We still have not gotten the real story on their "infrastructure incident", and we never will, because Fedora == RedHat.
Takeovers and Fedora Posted Mar 28, 2009 3:39 UTC (Sat) by nixternal (guest, #41048) [Link]
I think Fedora has stood the test of time now and could possibly stand on its own two feet. I am not a Fedora user either, but I have to say it is my favorite RPM based distro, and I really enjoy their community, a great group of people. I remember a few years ago someone reported about Microsoft acquiring Red Hat and also about VMware and Red Hat. I am fairly certain this isn't the first time that analysts have said this. These same analysts were saying the US economy was strong last year too :)
Takeovers and Fedora Posted Mar 28, 2009 14:24 UTC (Sat) by sbergman27 (guest, #10767) [Link]
Fedora has been around a while, but has always remained firmly in the grip of Red Hat, Inc. For example, the Fedora board is *required* to have at least 4 of the 9 seats filled by RedHat representatives. This used to be 5 out of 9. Last I checked, at least one of the "community" seats was filled by a Fedora employee. And the chairman, a Red Hat representative, has veto power over anything that the rest of the board decides. Most of the developement resources, including human resources, are supplied by Red Hat, Inc. I'm not sure that I would call that standing the test of time in the current context.
Fedora Legacy was a pretty effective demonstration of what happens when Fedora strays from the domain of what Red Hat cares about. And the notable opacity with which last year's security breach was handled further underscores Fedora's role as an extention of a pulically traded corporation.
I seriously doubt that Fedora would survive a takeover of its parent company by, say, Oracle. At least, I wouldn't expect it to emerge in a recognizable form. This has always been a danger with Fedora. It's just that it is becoming more apparent now.
Takeovers and Fedora Posted Mar 29, 2009 2:41 UTC (Sun) by rahulsundaram (subscriber, #21946) [Link]
5 seats are elected and 4 seats as appointed and those appointed seats need not be from Red Hat at all. Chris Tyler for example, who is a current appointed member is a professor at Seneca College
The veto power by the chair has never ever been used during the last 5 years where Fedora has existed as a project and very unlikely to be ever used and it is explained clearly in the Fedora Board wiki page. The Board is not directly involved with any day to day decisions either. Fedora Engineering Steering Committee which actually oversees the technical decisions is a fully elected body.
Majority of Fedora contributors are volunteers as well. Even among say package maintainers, 2/3rd of the packages are maintained by volunteers
There is a lot of things going on in Fedora which Red Hat doesn't have any interest in and they continue getting more contributors all the time. Fedora Legacy was started by Jesse Keating who is a Red Hat employee and a release engineer of Fedora. It failed simply because is didn't get enough community members contributing to the project. Fedora Board just approved a new community group trying to do something similar. Let's see what happens.
Takeovers and Fedora Posted Mar 29, 2009 15:35 UTC (Sun) by sbergman27 (guest, #10767) [Link]
The 4 seats are held by whomever the parent corporation, currently Red Hat (and subject to change), wants to hold them. As it stands, even under the relatively benevolent red Hat management, 7 of the 9 board members are employed the parent corporation. As is the chairman with the absolute veto power, of course. Your basis for claiming that the veto power is unlikely ever to be used, in the context of a change of management and/or ownership at Red Hat is very unclear. It is there to be used whenever the management of the parent corporation decides to use it. Although, considering the tightness of grip it already holds upon the board, I would agree that, to that extent, the veto power would unlikely be necessary.
This current new attempt at a truly community-based extention to the ludicrously short 13 months approved by RedHat is interesting. But until such time as it either proves itself or founders, the failed Fedora Legacy is still our best indication of how well Fedora's community fares when it strays outside the dictates of its parent corporation.
Takeovers and Fedora Posted Mar 29, 2009 17:47 UTC (Sun) by rahulsundaram (subscriber, #21946) [Link]
To qualify for an election, you need to be a Fedora contributor and it doesn't matter whether you are a Red Hat employee or not. Many Red Hat people happen to be elected because they were trusted by the community to do a good job. The veto is unlikely to be used because a large volunteer community of contributors cannot be vetoed down without creating significant problems
http://fedoraproject.org/wiki/Board
"The expectation is that this veto power will be used infrequently, as there are negative consequences that could arise from the frequent use of such power in a community project"
Such veto power isn't that uncommon either. Linus Torvalds or Mark Shuttleworth have veto powers as well.
13 months as a lifecycle wasn't decided by Red Hat. Fedora Board decided to extend the lifecycle from 9 to about 13 months when Fedora Legacy went off and Red Hat was indeed consulted on that decision since they have to shoulder the additional cost of the work done to support the extension.
Legacy isn't a good indicator because the failure is not only single thing, nor was it dictated by anyone. Policy of going through a full package review for each and every update for example was onerous on volunteers. The presence of RHEL and free rebuilds of it that provided a much longer lifecycle was another. There are many many good examples of communities in Fedora that did things beyond what Red Hat cared about including the KDE and Games communities.
Takeovers and Fedora Posted Mar 29, 2009 19:22 UTC (Sun) by sbergman27 (guest, #10767) [Link]
"""
To qualify for an election, you need to be a Fedora contributor and it doesn't matter whether you are a Red Hat employee or not. """
But in fact, even with its current, relatively benevolent, corporate ovelord, 7 of the 9 positions *are* held by employees of that overlord. You keep wanting to ignore that fact. That overlord is RHT today, but could easily become ORCL, IBM, JAVA (formerly SUNW), or MSFT tomorrow.
"""
Not legally binding. Doesn't mean diddly once Larry Ellison is at the helm.
"""
Neither of them are publicly traded corporations, legally bound to act on behalf of the financial interests of their investors. Thus the Linux kernel is more solidly grounded. And Ubuntu, as well, for that matter. Especially considering that it is solidly anchored to Debian, which is about as close to the Rock of Gibraltar as one can imagine. By comparison, Fedora is at the mercy of the market, and whoever owns Red Hat's assets.
"""
A board *overwhelmingly dominated* by representatives of Red Hat, Inc. But you refuse to see that obvious and very relevant *fact*.
"""
This makes no sense. It didn't need to be "dictated" by anyone. All Red Hat had to do was *decline* to provide resources. Certainly Red Hat did not step forward to help with manpower. And IIRC (as in "it's been a while and I don't remember for sure"), Legacy asked for some hosting resources and their request was rejected. Red Hat would not stand for a Fedora distribution that did not "Eat Your Brane" with things like a 13 month release cycle, with multiple gigabytes of patches issued over that time. They are trying to sell RHEL, and a Fedora that was usable in the enterprise would, understandably, be unacceptable to them from a business standpoint. Legacy was a *very* good example of what happens when a Fedora related community project strays outside of what Fedora's corporate patron desires. Fedora, having always depended upon corporate sponsorship, simply does not have the community that, say, Debian does. And Legacy was a perfect example of that.
Takeovers and Fedora Posted Mar 29, 2009 20:00 UTC (Sun) by rahulsundaram (subscriber, #21946) [Link]
The elected members are only elected because the community believes that they will do a good job. Red Hat people in the Fedora community are in those positions for the same reasons. Other corporations will have to earn similar trust before they get elected like that. It is not something that can be taken for granted.
In a free software community, governance and legal binding cannot really be a replacement for trust. That's the power of free and open source software. Otherwise, the community simply will fork and take the project in a different direction. Fedora makes it very easy to do this since pretty much all of it is free software.
If you claim that Fedora Board only extended the lifecyle because Red Hat members were more in it, then it stands to reason that Red Hat supported the move and that directly conflicts your next point. As a founding member of the board, I can tell you that Red Hat has taken a very hands off approach and board decisions tend to be its own. The only real exception is legal issues.
Red Hat business model is based on services around free software and if people can continue using a free rebuild if Fedora was strangled deliberately like you claim and no, legacy was never denied hosting resources. Hosting was never a problem for that project. Legacy failed because cherry picking security patches isn't a easy job to do and its own policies didn't help either. There are several other reasons as well. It is a complex story.
As long as Fedora is free software, the real power will always rest with the community which has way more volunteers than any single organization.
Takeovers and Fedora Posted Mar 29, 2009 20:40 UTC (Sun) by sbergman27 (guest, #10767) [Link]
"""
Other corporations will have to earn similar trust before they get elected like that. """
They'd need *one* person out of the 5 elected positions that they could count on to vote with them to control the show without having to resort to the veto power that they have automatically, anyway, but which would be less politic to resort to using. Just one. Of course, most of the Fedora's resources, including human, come from the parent company, which is probably more persuasive than anything that happens regarding the board.
"""
That's pretty feeble. A 13 month life-cycle vs a 9 month life-cycle is not something that would step on RHEL's toes. Both terms are so ludicrously short that no RHEL customer would look twice. A bid to extend support to 18 months would be somewhat less acceptable to Red Hat. But 13 months is still "Eat You Brane" enough to be acceptable.
"""
Brave words. But I have not seen convincing evidence that Fedora has the community to do more than just talk about it. Sans Red Hat funding, I don't see it happening. How long did it take this community to even get a public CVS service available? Years. And of course, even if they did manage it, it wouldn't be Fedora. Couldn't even be called Fedora. Because that would be owned by the patron corporation.
"""
How you can overlook Fedora's dependencies on the parent company's resources, including all the many, many paychecks they write, is amazing. No doubt you think that the devs do it all out of love and don't care if they get paid. Maybe some of them do. But in the end, most of them have financial responsibilities and commitments, house payments, and many have families to feed. And they will do what is required to get their paychecks. And if that involves changing their thinking a little, that is what they will do.
Fedora lifetime Posted Mar 30, 2009 1:14 UTC (Mon) by vonbrand (subscriber, #4458) [Link] Fedora is about "bleeding edge", keeping the release around for much longer than 2 release cycles (around a year) makes no sense: Fedora users won't stay with some older version (Fedora Legacy's demise attests to that), and keeping old stuff reasonably safe is a huge amount of work (that few people enjoy doing). All this has very little to do with stepping on Red Hat Enterprise's toes. If somebody wants that level of stability, they are happy to pay for support. If they don't want to pay, there are clones like CentOS. Can we cut out the conspiracy theories? If Red Hat gets taken over, we'll see what happens to Fedora. Remember that it started as an independent organization, it could very well become independent again. The software infrastructure on which it lives is open source, and work is going on to make it easier to replicate. Sure, such won't make headlines soon.
Fedora lifetime Posted Mar 30, 2009 3:04 UTC (Mon) by sbergman27 (guest, #10767) [Link]
"""
Can we cut out the conspiracy theories? """
I have presented no "conspiracy theories". Nothing I have said strays outside what would be expected within the domain of ordinary business practice.
"""
Indeed we will. Why are you so uncomfortable with the idea of considering the likely consequences ahead of time? It seems only prudent to have a plan.
"""
I'm surprised that you would bring that up. But yes, fedora.us was a small and not particularly successful or well known community project which packaged add-ons for the old Red Hat Linux, and which happened to have a name that the nascent Red Hat Linux Project wanted. But even my relatively pessimistic view would have any resulting fork of Fedora doing at least a *little* better than the old fedora.us had managed.
Fedora lifetime Posted Mar 30, 2009 3:06 UTC (Mon) by motk (subscriber, #51120) [Link]
"fedora.us was a small and not particularly successful or well known community project"
Hells bells. Where does one even start to begin to commence?
Fedora lifetime Posted Mar 30, 2009 12:36 UTC (Mon) by sbergman27 (guest, #10767) [Link]
"""
Hells bells. Where does one even start to begin to commence? """
If you disagree, I suggest you find some way to commence. Quite a few readers, today, likely have never heard of fedora.us.
Fedora lifetime Posted Mar 30, 2009 3:04 UTC (Mon) by motk (subscriber, #51120) [Link]
sbergman27 is still butthurt about the RHL/Fedora split? Gad.
Fedora lifetime Posted Mar 30, 2009 12:21 UTC (Mon) by sbergman27 (guest, #10767) [Link]
"""
sbergman27 is still butthurt about the RHL/Fedora split? """
Where did you get that idea? Vonbrand referenced the transition and the origin of the name, and I provided some background context. Many, today, probably do not remember fedora.us. As a Red Hat user since RH4.2, I was watching at the time of Fedora's birth out of the Red Hat Linux Project, though I have since moved on to more stable distros with more responsible maintainers, after suffering through more releases of Fedora than I should have.
Why so defensive, motk?
Takeovers and Fedora Posted Mar 31, 2009 5:20 UTC (Tue) by rahulsundaram (subscriber, #21946) [Link]
Majority of Fedora is lead by volunteers. We have hundreds of volunteers within Fedora working on most of the packages, infrastructure, documentation, artwork etc and about a dozen Red Hat people working full-time on Fedora. Once you realize this, the rest of your arguments fall apart completely.
Red Hat is a 100% open source company and therefor not "tempting" for proprietary vendors Posted Mar 29, 2009 17:14 UTC (Sun) by kragil (subscriber, #34373) [Link]
The employees could just take the code and use the Fedora infratructure to build a "Black Shoe" Distro and would probably get a lot of new subscriptions.(Probably more than Oracle.)
For a lot of FOSS people that would make a lot more sense than working for Oracle.
Red Hat is a 100% open source company and therefor not "tempting" for proprietary vendors Posted Mar 29, 2009 17:50 UTC (Sun) by rahulsundaram (subscriber, #21946) [Link]
All of Fedora including software that supports the Fedora infrastructure is completely free and open source with very few exceptions like firmware, in part to enable people to take a different path when necessary.
http://infrastructure.fedoraproject.org/csi/free-software...
It is a important freedom that Fedora strives for.
Red Hat is a 100% open source company and therefor not "tempting" for proprietary vendors Posted Mar 29, 2009 17:57 UTC (Sun) by kragil (subscriber, #34373) [Link]
That is what I said, isn't it?
I meant take the RHEL code and use the fedora infrastructure to build it. Would be an "easy" thing to do for former RH employees.
Red Hat is a 100% open source company and therefor not "tempting" for proprietary vendors Posted Mar 29, 2009 19:35 UTC (Sun) by rahulsundaram (subscriber, #21946) [Link]
Yes, you were right and I was just adding some information.
|
|||||||||||||