Roughly equal companies in terms of market cap — $220B — but with IBM’s enterprise value about $50B, I am predicting a merger of IBM and Microsoft with IBM leading the merged company, Ballmer retiring, and Microsoft being run — at least for a while — as a branded line of business in the twice as large, new IBM.
The fit of Microsoft’s enterprise solutions — Office, Exchange, Sharepoint, database, programming tools — with IBM’s corporate offerings is great. Also, IBM is the perfect partner to capitalize on the (eventual) migration away from Windows as a PC and server O/S.
As part of the deal, IBM would spin out various parts:
- The gaming side — Kinect, Xbox — would be spun out as a standalone.
- Phone software — spun out or sold off. Merged with Nokia?
- Bing — a money-losing proposition, might be sold off.
We’ll see, but I think $25-50B could be saved in a merger, with all of that going to the bottom line for investors.