Explanation of What Will Happen to Red Hat (and Other Acquired Companies) After August

posted by Roy Schestowitz on Aug 14, 2026

In short, a lot will be scuttled; history shows it happens over and over again

In September or the end of September there will be big changes and many people at IBM will lose their jobs. 1 hour ago a person explained: "PIPs are how they GET you on an RA. They have to create a paper trail showing poor performance. That's what a PIP is. Every RA I know in Consulting, barring last year's purge of non-Indian staff in March, was put on a PIP, however brief or nonsensical, before the RA. If you are on a PIP you are going to be RA'd in the September batch. Guaranteed."

That says "PIPs are how they GET you on an RA." But in practice PIPs are how they get people to 'resign' so that IBM won't have to pay anything and won't even call that a layoff.

There's meanwhile this discussion about what happens when the Gerstner company buys your employer and what happens next:

IBM increasingly relies on acquisitions to supplement growth, but acquisition-driven growth has a finite shelf life: once an acquired company is included in year-over-year comparisons, that revenue becomes the new baseline, forcing IBM to find another acquisition simply to repeat the boost—while integration risks eroding the very engineering culture and product momentum it purchased.

In the first half of 2026 alone, IBM generated $4.8 billion of free cash flow but spent $10.5 billion on acquisitions, carried $62 billion of debt, and still paid $1.6 billion in dividends in Q2. The contrast with IBM’s rhetoric on AI investment is striking. In December 2025, CEO questioned whether the enormous hyperscaler AI buildout could earn adequate returns. Yet the companies actually making those investments are showing measurable results: AWS grew 37% to $42.2 billion and produced $16.6 billion of quarterly operating income, while Google Cloud grew 82% to $24.8 billion and generated $8.8 billion of operating income; Alphabet spent $44.9 billion on Q2 capex and raised its 2026 investment plan to $195–205 billion specifically because demand continues to exceed capacity.

Not every AI dollar will earn a good return, but criticizing competitors for investing aggressively while IBM preserves its dividend and repeatedly buys growth is a dangerous strategy. Eventually there are fewer transformative companies left to buy, acquisitions become more expensive, and yesterday’s acquired revenue stops being growth. At that point, IBM will need what acquisitions cannot manufacture indefinitely: organic innovation, infrastructure ownership and customers choosing IBM for new workloads.

On acquisitions:

I have been working at IBM for decades in R&D as a lead architect. There are few acquisitions that were pushed on our team. 1- Our team was never involved in the decision making for these acquisitions.

2- Most, if not all, the product, were not adequate to our product line. The ones that could be salvaged required some serious rework.

3- We were pushed to cut the development schedule, under the pretext, the executives are providing the tools to help the development work. I am suspecting there are bribes involved and executives are thieves.

The steps of acquisitions:

Isn’t this the new SW division model?

1. Over pay for innovation
2. Layoff any legacy IBM employees associated with the acquired company
3. Replace legacy employees with acquired company personnel
4. Become the distribution arm for the acquired company (eg grow acquired company worldwide)
5. Get developers of acquired company to personalize SW to IBM Enterprise offerings
6. Move support to India and layoff home country support
7. After one year start moving acquired company SW developers to India
8. After 2 years let essential acquired employees go
9. After 3 years call remaining acquired company employees “legacy” and move to India
10. Repeat above with a newly acquired company

This already happened earlier this year. The media did not cover it. █