By Aaron Pressman and Adam Lashinsky
October 30, 2018

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IBM made a big move Sunday evening by buying Red Hat for $34 billion. This was the second consecutive business day of great news for North Carolina technology companies, the previous jolt being the new investment in Fortnite maker Epic Games.

That’s about where the good news ends.

Investors hated the all-cash deal, which will force IBM to suspend share re-purchases, increase its debt, and leave the company unable to make other big acquisitions should enterprise software prices ease in coming years. IBM’s shares fell 4%, deepening their embarrassingly negative 7-year run, almost to the day, of the Ginni Rometty era. Even more telling, Red Hat’s shares ended the day near $170, 12% below the $190 per share IBM promised to pay. This means investors are skeptical the deal will happen at this inflated price. (The companies announced IBM will pay Red Hat nearly $1 billion if the deal falls through.)

The deal is make or break for IBM and a maker or breaker for Rometty. She said Sunday the deal will make IBM the “No. 1 hybrid cloud provider,” referring to the market for renting clients online computing services in both “public” and “private” varieties.

Almost no one believes that will happen.

Amazon, Microsoft, and Google dominate cloud computing, with Microsoft having begun to invest years ago in the “hybrid” concept. In fact, Satya Nadella ran Microsoft’s Azure business that pursued the hybrid strategy when he was promoted to CEO. IBM, by contrast, is a pipsqueak in the business, and adding open-source services provider Red Hat won’t meaningfully change that.

The problem is that IBM is late to the game. One longtime enterprise software analyst told me Monday buying Red Hat “only helps the ice cube melt more slowly.” Stratechery’s Ben Thompson called IBM’s previous “commitment to the cloud … an accounting fiction derived from re-classifying existing businesses.” (His takedown of the deal is worth the read to understand IBM strategic quandary.) Breakingviews, which slammed IBM for “overpaying for relevance,” walks through why it is unlikely the deal with ever pencil out financially.

IBM had to do something, of course. Its existing businesses aren’t growing, and even its much-hyped Watson artificial intelligence unit has failed to ignite. Slow growth, flashy marketing that doesn’t deliver, and giant acquisitions. Sound a lot like another stalled icon: GE.

The chances this elephant will dance again aren’t good.

Adam Lashinsky
@adamlashinsky
adam_lashinsky@fortune.com

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