“According to a Reuters report that crossed the wires late today, the speculation is that Microsoft will make bids to buy both Rational and Borland. Shares of both Rational and Borland are up on the news, and so far both IBM and Microsoft have no comment on this report.” This from Java Developer news. I’ve been digging around but haven’t been able to get a confirm or deny from MS sources.
Microsoft to Buy Rational and Borland?
2002-12-12 In the News 50 Comments
A few days ago http://www.heise.de, the web-portal of the world’s largest computer magazine `ct has posted, that Rational was bought by IBM for about 2,1 Billion US Dollars.
Take a look at http://www.heise.de/newsticker/data/jk-06.12.02-003/
Yes, and we reported on that, remember?
However, there was no press release about this, which suggests that this IBM-Rational deal was not final. And now, Reuters report this new stuff, about MS getting into the picture.
The borland website says :
#1 in Java development solutions
#1 in Linux development solutions
#1 independant path to .net
I guess that’ll be history soon then. 🙁
An extract from their website follows, not the phrase “definitive agreement”.
IBM and Rational Software Corp. announced the two companies have entered into a definitive agreement for IBM to acquire the equity of Rational at a price of approximately $2.1 billion in cash or $10.50 per share.
“You should never, never doubt what nobody is sure about.”
it would create a monopoly market share in the dev tools realm….I mean VS + Borland = like 85% of the market.
These are some serious good buys from Microsoft’s standpoint. Borland integrates the only real alternative to Sun’s Java tools into Redmonds stable of tools, and, assuming MSFT wins the bidding war for Rational, it would enhance their e-com services-which are anchored by Great Plains.
Now, if they would just buy SEGA……
It doesn’t seem like MSFT is just going to allow IBM to swallow the biggest Windows CASE tool vendor and industry standards setter without a fight – and we all know who has the deeper pockets. I bet MSFT thinks that they cannot afford to allow this to happen if they want Visual Studio .NET to make further inroads into large-scale project development and they will not allow it to happen.
I never realized that Borland was such a good choice for CASE tools on the Windows platform (maybe not as good as Rational, but certainly not bad). If I had, I wouldn’t have done so much complaining about the Rational-IBM deal when that story was first posted a while ago.
I suppose Microsoft could still make a hostile bid. There’s an antitrust risk since they control the desktop OS market (remember their buyout of Quicken was disallowed several years ago). Borland would be a nice consolation prize, but clearly IBM anticipated that countermove when they were considering which guy they preferred to have. There would be lots of overlap between Microsoft and Borland’s offerings, after they move all the Borland IDE and Java development stuff over to .NET. How would MS position Delphi alongside C#?
“How would MS position Delphi alongside C#?”
They’d probably kill it off.
Delphi has been a thorn in MS’s (Visual Basic) side since it’s release.
MS went so far as to hire lot’s of Borland’s top engineers to try and thwart Borland, but in the end they failed.
Borland is much stronger today.
I hope MS does not buy Borland…I’d rather see IBM pick up Borland if it came to that.
It doesn’t seem like MSFT is just going to allow IBM to swallow the biggest Windows CASE tool vendor and industry standards setter without a fight – and we all know who has the deeper pockets.
Yes – IBM.
How would MS position Delphi alongside C#?
Agreed. I think everyone would prefer to have Borland stay independent the way that they are now. MSFT doesn’t necessarily need to buy Borland outright if they are worried about someone else buying them – they could do some kind of stock swap deal and own enough of Borland to prevent this (even then, antitrust issues could still be a problem though).
As I understand it, an offer has been made by IBM’s board to Rational, which has been accepted by Rational’s board.
However, this has to be put to Rational’s shareholders (plus the usual government approval).
It is not uncommon for other offers to be considered at this stage of a deal of this nature.
Shice, can you show me a link showing IBM having anywhere near the $35 Billion in CASH that MSFT has? This is 2002, not 1992.
Remember, IBM has been conducting layoffs this year, while MSFT has announced plans to hire 5000 new developers. Now why do you think that would be?
I would be extremely suprised if the Justice Department would allow msft to purchase anyone at this point, due to antitrust concerns.
“I would be extremely suprised if the Justice Department would allow msft to purchase anyone at this point, due to antitrust concerns.”
You must be joking. The Justice Department has been bought and paid for.
MSFT got away with buying Great Plains, who had just finished swallowing Solomon themselves!
There is also Visio and that big European supply-chain software vendor (can’t remember the name) that they bought.
OK, perhaps that was rash, but it does appear that someone was bought and paid for. The Justice Department, more accurately, has been actively discouraged.
This is the European corp that I was referring to that MSFT bought: http://www.navision.com/hq/
<quote>OK, perhaps that was rash, but it does appear that someone was bought and paid for. The Justice Department, more accurately, has been actively discouraged.</quote>
I do not believe that is going too far to quip that the Justice Department is bought and paid for in terms of support to MS against the anti-trust lawsuit it faced. It was a quip.
The Republicans in general are more pro-business interests and wading into further battles with Microsoft is naturally (if you look at the party and the people in the cabinent) not high on their lists of things to do.
To take a watered down easy to swallow judgement was much better for the administration than a long fight with the deep pockets of Microsoft. They gave up because they did not believe in the fight to begin with and it was the easiest way for them to get out of it.
Microsoft obviously has the blessing from the US Government to do whatever they want.
So I would not be surprised if Microsoft offers $3B+ in cash for Rational and buys Borland as well.
– Red Pill
C++ Builder is a far better product the MS VC++. Borland enables the developer to create MS looking apps without jumping through all the hoops you have to do with MS crap. If you want dockable windows it’s just a couple lines of code. Icons in your meus no problem its just a property that has to be set.
What would become of Kylix? With MS hate for Linux you know that tool would become a thing of the past like WordPerfect for Linux, and what about all Java tools. Borland JBuilder works the same consistance no matter if you are using it on MS, Linux or OS X.
I truly hope this dosen’t come about. I hate those bastards.
RATL is back to $10.45/share, just below IBM’s offer of $10.50, right where you’d expect it to be with no other bidders. However, Borland is at $12.31/share, up over 10% since last Friday when the deal was announced.
The Street apparently doesn’t think Microsoft will go after RATL. Microsoft would have to offer a premium of at least 30% over a price they apparently thought was too high to begin with. Rational’s offerings are cross-platform and service-intensive and really dovetail better with IBM rather than Microsoft, which hasn’t really ramped up its service business. Finally, I read somewhere that the IBM deal has a clause giving IBM access to Rational’s source code in the event that it’s outbid by a competitor.
I think this settles the deeper pockets question…
If MSFT bids higher than IBM, they may acutally be able to pull Rational out from under IBM.
If they were to try and purchase Borland, they would be making themselves a monopoly on development tools by buying the competition out. The Justice Department would never let that happen.
“I would be extremely suprised if the Justice Department would allow msft to purchase anyone at this point, due to antitrust concerns.”
The government would probably allow Microsoft to purchase some companies. But Borland? I doubt it. That would create a virtual monopoly professional Windows programming tools when it comes to C++ and such.
I’m afraid not. The particular Fortune chart you linked to only shows gross revenues. Also note, Enron is ranked higher than both MSFT and IBM on your chart. What does that tell you?
MSFT’s net profit margin on it’s gross revenues after operating costs is about 85% – IBM doesn’t even come remotely close to this. So even though IBM has higher gross revenues than MSFT, it has nowhere near as much expendible cash for things like takeovers (and it’s market cap is also a lot lower) because its expenses for keeping itself alive and running are proportionally huge compared to MSFT.
Now, take a look at this page of your own data:
MSFT’s return on revenue is 85% for the Office division only (apparently, the overall company is 29%). Sorry.
…that has no substance to it… This is insanity.
BEA/IBM/Microsoft are all buying tools makers. Meanwhile Sun is buying star office.
Im afraid, Gil Bates, that you need to take another look. Microsft may get good return, but on less total revenue. Look at the raw profits, in doller amounts, and IBM actually does edge out Microsoft.
Correct, even though IBM makes triple+ the revenue of MSFT, their net profit is nearly identical (MSFT’s market cap is 50% higher though) because IBM’s return is about 9% and MSFT’s is 29%.
My point still stands because, as I said, MSFT right now is sitting on $35+ Billion dollars in CASH [!!!]. IBM is not sitting on anything like that kind of war chest, AFAIK, and they will lose any takeover fight against MSFT if MSFT wants to win it badly enough.
The whole $35+ billion isn’t that huge of an amount when you account for the billions that even Apple Computers has saved up in the bank.
I’m not making up any assumptions just saying, lets keep the $35+ billion argument out until we know how much IBM is sitting on. Right now that argument is invalid without knowing what it is up against.
“The whole $35+ billion isn’t that huge of an amount when you account for the billions that even Apple Computers has saved up in the bank.”
Microsoft the company is disgustingly wealthy. In a recent interview, Bill Gates essentially said that the cash is mainly there for future large investments and to keep MS afloat in case several investments go bad at once. He also said that they don’t immediately plan on distributing all of the cash as dividends among their shareholders, so it’s not going anywhere soon. $35 billion (US) is a whole lot of cash. That’s more than some major banks and investment firms have in total liquid* assets. IBM may still win it if they want it even more, and it seems like they truly do, but Microsoft could snatch it from them without suffering too much.
Frankly, my bet is still with IBM because they said “a definitive agreement”. That’s not something you throw out there to make yourselves look good. If something hadn’t been actually worked out, they would have said “preliminary”, “tentative”, or “are still in discussions”. Of course as Matthew Adams said much much earlier, it has to go through the shareholders’ vote and the government before it happens.
As for Borland, I’d actually like IBM to buy them, they could make them improve Eclipse and make it the best IDE for Java, .NET, or anything else. Or they could just pay them to work on GCC ;-).
About Microsoft’s cash reserves? And, how about IBM’s and Apple’s?
That’s quite a war chest Billy has. I guess it’s too much to ask that he share the wealth with the investors that made him a multi-billionaire.
MSFT is essentially now also a major investment firm, not just a software company. Someone on this forum has already mentioned that MSFT has its own law firm too.
“…This is a mind-bogglingly large pile of dough. No other nonfinancial firm has more liquid money at its disposal, and only a handful of banks do. It’s more cash than Ford, ExxonMobil and Wal-Mart have combined, and nearly four times as much as Intel, the tech company with the next largest cash balance. It is enough to buy the entire airline industry — twice. Or all the gold in Fort Knox, four times over. It is enough to buy 23 space shuttles or every major professional baseball, basketball, football and hockey team in America.”
Sorry Bannor99, I couldn’t figure out where to find Apple and IBM’s cash balance numbers.
“I couldn’t figure out where to find Apple and IBM’s cash balance numbers.”
Cash + Short Term Investments:
MSFT $40 Billion
IBM $5 Billion
AAPL $4 Billion
Thanks. I can shut up now.
OH!, such and easy question. They will of course EMBRACE AND EXTEND IT! )))
Actually, Borland is not very much important in this point, since there is killer open sourced Java IDE, which is unifying all the Java developers under the same umbrella: ECLIPSE. (http://www.eclipse.org) It will be truly universal IDE next year probably. AND, it is running on Linux, MacOSX, Solaris, Windows etc, since it is written in Java.
Eclipse is the best IDE I’ve ever used up to date. Much better than JBuilder (which was alright) or MS Visual Studio calamities.
Poor Delphi developers though.
So the next step for Microsoft is to start buying Linux supporting companies ?
> OH!, such and easy question. They will of course EMBRACE AND EXTEND IT! )))
They’ve already embraced it 😉 Windows 95 (iirc) shipped with a DLL bult in house by M$, written in Delphi. No lie. Charlie Calvert told us this with glee at a conference once. Apparently no one realised untilBorland was doing R&D for Kylix, and released a tool that went looking for Delphi code in exe/dlls etc to find the most commonly used classes.. lol.
>>$35 billion (US) is a whole lot of cash. That’s more than
>>some major banks and investment firms have in total >>liquid* assets.
what does that tell you about the banking sector at the moment?
anyway, having large cash reserves is always a good idea for buisness, especially if you are a predadtory company.
>>Frankly, my bet is still with IBM because they said “a >>definitive agreement”. That’s not something you throw out >>there to make yourselves look good.
>>Of course as Matthew Adams said much much earlier, it has
>>to go through the shareholders’ vote and the government >>before it happens.
not to mention EU regulators whose bosses (EU nation states) are at the moment a little twitchy about MS over licensing.
and if I we’re they I’d be loathe to give a whole area of the software industry to any company, let alone MS (or even IBM).
>>>Actually, Borland is not very much important in this point, since there is killer open sourced Java IDE, which is unifying all the Java developers under the same umbrella: ECLIPSE.
Borland is important when you consider about Eclipse plugin’s.
“…anyway, having large cash reserves is always a good idea for business, especially if you are a predatory company.”
Yes, being insanely fucking rich is always a very good idea in business. Thanks for the tip, genius.
Actually, that wouldn’t be such a bad idea. Red hat has a decent market cap, so it might be harder to swallow than some others, like connectiva, but if I were Ballmer, I’d start looking seriously at it.
A windows co-branded linux would give MS the ability to finally carve out a niche in what had previously been UNIX only markets. You just reprice MS Enterprise servers so that the MS code becomes premium. Then offer MSlinux to the low end, and pressure them to upgrade.
Seems a natural extension of MS’s embrace and extend.
SEC would block it. For sure. If they don’t, they must have been corrupted. Besides, Microsoft themselves have little to gain from Borland. Most of their successful tools are direct competition to their tools or tools for altenative languages/platforms. It is way more cheaper to improve their products and enter those markets themselves (namely Java and Linux) than to buy of Borland.
So perhaps the only thing Microsoft would gain is less competition. But currently with their IDEs, I don’t really think they care about what their competition is doing all that much.
The Justice Department would only block sales that would potentially remove all forms of competition in the market. In this case, maybe. However, they won’t block the sale based on the antitrust case. They would only block if Microsoft was buying Apple or a bunch of Linux companies.
As to Gil Bates, Great Plains is very different. Microsoft, to the best of my knowlegde, didn’t have any form of dominance in that market, therefore buying off one producer is okay. The same with Visio. But if they wanted to buy every company in the market, it would be blocked, for sure.
As for Navision, I won’t comment until I know what it is..
Sun bought StarDivision quite some time ago.
I don’t think Microsoft has any intention to feed the Penquin. By buying Borland, Microsoft merely tries to starve Linux by dis-continuing development tools – no more Kylix.