In another busy week in tech as earnings season continues, this week's top stories feature two earnings reports and one major acquisition.

  • IBM (NYSE:IBM) announced that it's acquiring open-source cloud software company Red Hat (NYSE:RHT).
  • Fitbit (NYSE:FIT) stock jumped after the company posted an unexpected profit.
  • Apple (NASDAQ:AAPL) stock took a hit after the company provided weaker-than-expected guidance.

Here's what you should know about each of these stories.

The word, Technology, on top of digital computing codes

Image source: Getty Images.

Red Hat

On Sunday, IBM announced that it's acquiring open-source software vendor Red Hat, in a deal valued at $34 billion. IBM said it will pay $190 in cash per share for Red Hat.

Since Red Hat was trading at just $116 before the buyout was announced, shares of the cloud software company surged when news of the deal broke. The stock skyrocketed more than 40% on Monday.

"This acquisition brings together the best-in-class hybrid cloud providers and will enable companies to securely move all business applications to the cloud," said IBM and Red Hat's press release about the acquisition. "Companies today are already using multiple clouds. However, research shows that 80% of business workloads have yet to move to the cloud, held back by the proprietary nature of today's cloud market."

With Red Hat under IBM's ownership, the two companies believe they will be better positioned to help accelerate multi-cloud adoption.

The deal is expected to close in the second half of 2018 and is subject to regulatory approval, a shareholder vote, and other customary closing conditions.

Fitbit

Fitbit impressed investors this week when it reported better-than-expected revenue and a surprise profit. The company posted revenue of $394 million, beating a consensus analyst for revenue of $381 million. The company's non-GAAP earnings per share came in at $0.04, well ahead of a consensus forecast for a non-GAAP loss per share of $0.01. 

Two Fitbit Charge 3 devices

Fitbit Charge 3. Image source: Fitbit.

Fitbit CEO James Park was optimistic about the company's recent momentum, noting that the company saw sequential growth for both its tracker and smartwatch devices. "We are now the No. 2 player in the smartwatch space in the U.S. -- a category we just entered with zero share only 14 months ago," Park said.

Park also raved about the company's recently released Charge 3, which he said is now "one of the top selling devices in the U.S."

Fitbit stock soared on the day following its earnings release, rising more than 20% on Thursday.

Apple

Tech giant Apple also beat expectations for both its top and bottom line, reporting an impressive 20% and 41% year-over-year increase in revenue and earnings per share, respectively. But shares fell sharply after the report because of the company's weaker-than-expected outlook for its important holiday quarter.

Apple said it expected revenue for its first quarter of fiscal 2019 to be between $89 and $93 billion, up from revenue of $88.3 billion in the first quarter of fiscal 2018. Analysts, on average, were expecting Apple to guide for revenue of $93.02 billion. Management cited a range of factors negatively affecting its guidance for the quarter, including currency headwinds, the timing of its iPhone launches this year compared with last year, uncertainty about its ability to ramp up supply of new products, and more.

Daniel Sparks owns shares of Apple. The Motley Fool owns shares of and recommends Apple and Fitbit. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.