IBM and Red Hat, Merkel Decision, Boeing Crash: CEO Daily for October 29, 2018

October 29, 2018, 10:46 AM UTC

Good morning.

“This is a huge day. It absolutely resets the cloud landscape.” That’s what IBM CEO Ginni Rometty told me yesterday, shortly after announcing her blockbuster $34 billion deal to acquire open-source software provider Red Hat, which will likely define her legacy at the 107-year-old computer company. “We will be the number one hybrid cloud provider.”

I asked what she could do as Red Hat’s owner that she couldn’t have done as its long-time partner. Her answer: “This will accelerate the customer journey to the cloud.” Big companies have only moved about 20% of their work to the cloud, she said. “They have done the easy work, the cost-oriented work.” Working together, IBM and Red Hat can attack the remaining 80%, allowing companies to create integrated solutions from the cacophony they now face. “A typical client has at least 1,000 applications, uses multiple clouds, faces vendor lock in.” Together, IBM and Red Hat can provide end-to-end solutions that allow clients “to do some on premises, some in the public and private cloud, unifying multiple clouds, applications and vendors.”

Red Hat CEO Jim Whitehurst, who will become part of the IBM management team, said his company will continue to partner with all cloud providers, including Amazon, Microsoft and Google. “Clients are demanding an open solution,” Whitehurst said, “which we are both dedicated to.”

When I asked why he was selling to IBM instead of one of the other cloud companies, he said “none of them have the depth of industry expertise” that IBM has.

More details here. Other news below.

Top News

Merkel Decision

German Chancellor Angela Merkel will reportedly not stand for reelection as chair of the Christian Democratic Union. The decision, which follows a steep drop in support for the CDU in the state of Hesse, as demonstrated in elections yesterday, all but confirms that Merkel is now in her final term as Germany's leader—she has previously said that the chairmanship of the party and the chancellorship were indivisible. Politico

Boeing Plane Crash

A Lion Air plane carrying 189 people has crashed off the coast of Indonesia. The plane was pretty new—a Boeing 737 MAX 8 that was delivered in August. The model only took to the skies last year; Boeing has 3,000 on order and has delivered 220, 13 of which went to Lion Air. Wall Street Journal

Brazil Election

Brazilians have chosen as their new leader the openly dictatorship-friendly, homophobic, anti-environmentalist Jair Bolsonaro. The extremist's election comes after years of corruption scandals and violence that left many people disillusioned with mainstream parties. Bolsonaro won 55% of the vote in a run-off against a candidate from the center-left Workers' Party. Here's what his election means. Fortune

Chinese Stocks

Chinese stocks fell again today, with the Shanghai and Shenzhen composites each down more than 2%. Analysts suggest there's a possibility of a rebound in the fourth quarter, though. Meanwhile, in Europe, the Stoxx 600 was up more than 1% at the time of writing, suggesting a buoyant start to the week. CNBC

Around the Water Cooler

Gab Spotlight

The social network Gab, which is popular among the far right, is in the spotlight after the Pittsburgh synagogue massacre. The accused killer, Robert Bowers, used the network to spread racist conspiracy theories and, on Saturday, to say he was "going in" before he went on to allegedly kill 11 people. PayPal is now cancelling Gab's account and GoDaddy has told the service to find a new domain provider. NBC

Sam's Club Tech

Walmart's Sam's Club is to open a Dallas store where it can test out new retail automation technologies, with a strong focus on the operation's existing Scan & Go app. New features will include an auto-filling shopping list and maps of stores that show where everything is—and naturally, at some point maps that take that automated shopping list and show the shopper where to walk to pick everything up. Fortune

Chinese Students

A think-tank, partly funded by Australia's defence department, has issued a report that says China has sent thousands of researchers from its military universities overseas to foreign universities, where they could be learning things to aid Chinese military technology development. The Australian Strategic Policy Unit said the researchers often hide their military affiliations when abroad. Financial Times

Weedy Neighbors

A federal trial begins today in Denver, in which a couple is claiming that the marijuana production facility next to their house has caused the property's value to drop. The couple is relying on anti-racketeering laws as the basis of their case, so there are many eyes on this one. Denver Post

This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.

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