In a report to the Securities and Exchange Commission (SEC) on Monday, IBM said CEO Ginni Rometty had bought $3 million worth of company shares. A week before Rowland bought IBM shares, the company announced that it would buy Red Hat, an open source software developer, for $34 billion.
IBM said Luo Ruilan bought about $1 million worth of shares in the open market. This is the first time she has bought shares in the open market since she was chief executive of IBM. In addition, Luo Ruilan bought a IBM stock worth about 2 million dollars through a retirement fund. IBM said that after the increase, Rowland had held more than 314,000 shares of the company, with a market capitalization of more than $36 million at Monday's opening price of $116.10.
IBM shares rose 3.80% on Monday, closing at $120.06, recovering some of last week's losses. Influenced by market turmoil and market doubts about the Red Hat deal, IBM shares fell more than 7% last week. According to Monday's closing price, IBM has a market value of about $109 billion 100 million.
Late last month, IBM announced that it would buy all outstanding Red Hat shares in cash for $190 a share for a total of $33 billion. The deal will be the third largest acquisition yet in technology history and is aimed at keeping IBM up to par with its competitors in the cloud software world. With the deal, IBM can overnight boost its credibility in the fast-growing and lucrative cloud market. IBM, the 107-year-old computer services giant, was once synonymous with mainframe computers. Because of its slow adoption of cloud-related technologies, the company has had to catch up with rivals Amazon and Microsoft in the cloud computing market.
IBM has always positioned itself as the so-called
Red Hat was founded 25 years ago as a publisher of Linux, a popular open-source operating system for server computers. Now, Red Hat is in charge of issuing and supporting
Open source is the biggest theme of this year's technology industry. Before IBM's acquisition of Red Hat, two large-scale acquisitions took place in the technology industry this year: Microsoft's $7.5 billion acquisition of GitHub, an open source hosting platform, and Salesforce's $6.5 billion acquisition of MuleSoft, a cloud application integration service. Earlier this month, big data competitors Cloudera and Hortonworks agreed to merge, trading up to $5.2 billion.
Since Rowland became CEO of IBM in 2012, the company's revenue has declined almost every quarter. Although this is partly due to the divestiture of non-performing assets, most of it comes from the decline in sales of existing hardware, software and service products, as the company has been struggling to compete with young technology companies. Rowland has been trying to steer IBM toward more modern businesses, such as cloud computing, artificial intelligence and security software, with mixed results.
Investors have become impatient, causing IBM shares to fall 31% in the past five years.