When the market starts rocking and rolling, so does the rumor mill. Wednesday's most interesting rumor, if not craziest rumor was that IBM (NYSE:IBM) might be mulling a bid for Adobe (NASDAQ:ADBE). This one-minute chart of Adobe shows the rumor hitting at around 2 pm ET, that sent ADBE on a upward trajectory right to the close.
IBM buying Adobe? The the rumor millers are getting creative these days. At present, ADBE has a market value of just under $26 bln vs. the market cap of IBM at $153 bln. Big Blue also has around $10 bln in cash on its balance sheet. So it is conceivable that IBM could engineer such a deal, but I find it hard to believe that ADBE management would sell out and find it harder to imagine how ADBE culture would mesh with IBM culture since I know IBMers here in the Hudson Valley and what's going on at Big Blue these days.
Incidentally, ADBE will post earnings Thursday evening. While press reports say the rise in ADBE today was due to optimism about earnings, the IBM rumor did indeed hit a number of trading desks that I'm in touch with. There's no doubt that ADBE will also post strong results tomorrow night. 36c is the Reuters consensus estimate for the bottom line, 730.1 mln is the top line estimate.
The better bet with ADBE is likely to go with the earnings story, and avoid speculating on the outlandish IBM for ADBE rumor.