https://www.fool.com/investing/2021/10/05/things-investors-must-know-ibm-kyndryl-spin-off/
"Key Points
+ IBM will spin off its managed infrastructure services unit as Kyndryl by the end of the year.
+ Kyndryl’s standalone financials look dismal.
+ Investors should follow IBM's lead and sell their new shares of Kyndryl once the spin-off completes."
Amazing balance sheet gimmickry by IBM CFO & accountants! Basically, they dumped all of their losses onto this unit & spun it out, knowing fully well, it will squirm & shrink for many years, if not crash & burn outright! They protected the IBM stock price & valuation & dumped the s**t out. Wow! I feel bad for Kyndryl employees, ex-IBMers.
MGF It gets worse Look at the margins 11% for Kyndryl and 31% for Accenture. How far does Kyndryl have to cut to get margins into the same range. There is yet a 2021 concern Kyndryl took an 887 million first half loss with 232 million pre-tax spin-off charge. I believe that nets to a 650 million dollar operational loss. That means the RA’s from last year and this year are not enough to break even and Kyndryl will have to take yet more cost cutting to reach operational parity. Remember the CEO equation is very simple As goes revenue so goes headcount. If Kyndryl at 9.52 billion in first half revenue (2 x 9.58 = 19.16 billion full year revenue vs 19.4 for last year) continues down the same path, they will have to cut some more. ALSO note Accenture grew revenue 14% last year, and Kyndryl is just trying to find the bottom to break even. This is not a pretty picture, and Accenture is showing Kyndryl where they have to get to to be competitive. I would speculate more cutting from Kyndryl is yet to come.
So nearly a Billion dollars on RAs in GTS alone? That sounds about right.
"Kyndryl is also deeply unprofitable. It racked up net losses of $990 million in 2018, $943 million in 2019, and $2.01 billion in 2020, which included $918 million in pre-tax charges for layoffs and other "workforce rebalancing" measures."