IBM misses estimates: Yahoo! Finance analysts Brian Cheung, Julie Hyman and Brian Sozzi
https://finance.yahoo.com/video/crocs-record-q3-revenues-ibm-153935479.html
13 replies (most recent on top)
This stinker was in comparison to a quarter during a very locked-down and depressed global economy. This stinker of a quarter includes pent-up rebound buying left over from the locked down days. IBM is definitely in an unstoppable overall decline, and splitting up the company is just going to leave one company that declines faster than the other.
IBM is a 48-50 billion dollar stock max It has consulting, SW, and HW/infrastructure. The Consulting is limited to the consulting partners ISV’s and Mainframe customers, the SW is limited to “Niche” SW offerings/ partners, including Redhat and AI. SW growth is driven primarily via acquition and milking the install base. Finally HW/Infrastructure is limited by the enterprise install base and the business cycle. (We used to call it farming the branch) NOTE you don’t see much new growth opportunities embedded here and you see a LOT of drag due to scaleout and commodity offerings. IBM will have to address the drag going forward, and address the age old IBM dilemma (over staffing of management) Deal with the over staffing and commodity and you may get to 5-7% growth Otherwise Infrastructure and stagnant SW will drag the company to 1.5-2% growth. The numbers don’t lie!!! Redhat and GBS can’t grow fast enough to move the needle on the dividend / investment requirement
1hft+1drnXrLW
And that is why GBS is growing…as it isn’t tied to the success (or lack of it) of IBM products. If IBM was to sell that part of the business, well it’s only a matter of time before IBM would disappear.
They way I see it, IBM needs GBS more than GBS needs IBM.
Yes, that is what they used to do at PWC before being acquired… they never digested being acquired. Time to unload GBS as well, they are useless anyway!
99% of what GBS does is implementing SAP, Oracle, Salesforce, Adobe + building data and analytics solutions for clients using non-IBM technologies + building new cloud native applications on AWS/Azure/GCP + outsourcing of client IT departments (support). Not doing anything with mainframes or legacy IBM software.
approx 3-4% growth
So we're basically keeping pace with inflation. That's not growth.
GBS is not going to be sold. In fact AK has bet the company on GBS being able to sell “SW modernization, and Redhat” to legacy mainframe accounts. GBS has been partnering with anyone who has a pulse. YES there was some confusion as to who should reside where. Most of that came due to services morphing at warp speed during the Covid outbreak. IBM finally decided what GTS and GBS were going to be when they grew up, and personnel decisions were made. We’re they perfect? Of course not, but GBS is hiring quite strongly to try and fill the gap. Yep it’s going to cost them some margin, as labor is quite short. So where does that leave Hybrid IBM? GBS growing like a weed (12%) but having high labor costs, SW growing marginally (2-3%) but offering purchased niche new products to try and grow the margins, and infrastructure shrinking (-8%) (you have to combine Systems with TSS thus the negative 8%) and hoping the business cycle will bail them out. If any division is going to be put up for sale it’s Infrastructure as they are the weak sister and are very cyclic. All in all when you do the math for new IBM, you get to approx 3-4% growth.
@1ofc+1drnXrLW
Wow that's a revelation which i bet none of the svps or Arvind "phd" krishna thought off because they're trying to prove to Wallstreet that after separating gts, ibm will be back to growth.
GBS (Consulting) is the next division that will be put out for sell.
I listened to a GBS call this week where some of their leaders were crying that now that GTS (Kyndryl) is gone they (GBS) won’t have the skills for some of their projects. So they are putting in place a process to deal with the projects where they don’t feel they have the skills because they know these are the projects that will go RED quickly!
This is really pathetic, isn’t it?
At least Consulting is growing. Shame that Cloud, and Global Markets ability to sell totally sucks though.
Results inline with IBM’s legendary mediocrity. Nobody should be surprised, some have taken advantage of it, great job and congrats Chanos!
Results were terrible
It was okay.