back to article 'IBM is now a very different company' says CEO as Q1 2022 beats expectations

Freed from the financial anchor that was its infrastructure services division - spun out as Kyndryl in November - IBM kicked off calendar Q1 of 2022 with something that has eluded it for years: decent growth. Big Blue has undergone some changes as it adapts to modern computing in the cloud, and CEO Arvind Krishna said trading …

  1. DJV Silver badge

    IBM is now a very different company

    Absolutely! In the past, the saying went, "No one ever got fired for buying IBM!"

    Now, it's more like: "No one in their right mind will buy from IBM."

  2. Doctor Syntax Silver badge

    "client engineering"

    A new one for the Bingo card.

  3. msobkow Silver badge

    Yes, it is a "different company." A pale imitation of its former self, fraught with numerous lawsuits, failed contracts, and abject failure to deliver, hence the shedding of that soon-to-be-expensive services division.

    Nothing like divesting yourself of a "division" before the bills for their failures hit the fan in court.

  4. cjcox

    We need to wait

    Some companies are masters of "creative accounting". Probably need to see several consecutive quarters before making any determination.

    And IBM is "big", which means they can masquerade "stuff" at will via acquisitions and sell offs. So, even after a year, we might still not truly know what is going on.

  5. TM™

    I'm not sure that without a cash cow monopoly (Office - MS, DB - Oracle, Ink - HP, Advertising - Google) these companies can make money. The need to quickly produce returns to shareholders severely limits big company's abilities to do things well, let alone innovate, or, worse still, turn things around. These companies are forced to make 'making money' the goal, but the paradox is the pursuit of money (as opposed to excellence, customer satisfaction, employee retention, etc) is not profitable. All that is left is stupid things like cutting expenses - e.g. sacking all your skilled staff, to make things look profitable while making one's executive bonus.

    1. Korev Silver badge
      Gimp

      I'm not sure that without a cash cow monopoly (Office - MS, DB - Oracle, Ink - HP, Advertising - Google)

      I'd count the mainframes as one for IBM here. Vendor lockin -->

      1. James Anderson

        Yep for years the mainframe hardware and software been subsidising the increasingly frantic efforts to grow a profitable AI/cloud/quantum/boondoggle business.

        Creative accounting has transferred mainframe revenues to whatever current fantasy products they are pushing to convince wall street they have a long term future.

        IBM is in the same position as UNISYS were twenty years ago. An extremely profitable legacy hardware and software business with lots of locked in customers but no viable new products.

        At least UNISYS faded gracefully without abusing its customers and employees.

  6. Yes Me Silver badge
    Thumb Up

    He's right about that

    Yes, it's different. It was a genuinely good company to work for 3 decades ago. Now, why on earth would anybody work there?

    1. Korev Silver badge
      Boffin

      Re: He's right about that

      I saw some presentations from their Zürich research group a few years ago and was very surprised that IBM have smart people there doing interesting work.

  7. sanmigueelbeer Silver badge
    Coat

    We have strengthened our portfolio

    Translation: With RedHat in our wing, we now have more money to burn.

    we are leveraging our ecosystem

    Translation: HR is doing a fantastic job terminating older staff members and replacing them with cheaper "alternatives".

    we are streamlining our business

    Translation: At IBM, we doing fabulous job double-crossing our sales team and their bonuses.

    While I acknowledge there is always more to do

    Translation: IBM is looking for other fat (and profitable) business to "absorb" so we can sink our teeth into that unsinkable bank account.

    we are pleased with the start to the year

    Translation: I got Ginny's helicopter! Yay, me!

  8. Always watching IBM

    Putting 8% Revenue Growth in Perspective

    A few things analysts aren't writing about to put this revenue "growth" into perspective:

    First - Last year the U.S. Inflation rate was 7%, (https://www.bloomberg.com/news/articles/2022-01-12/inflation-in-u-s-registers-biggest-annual-gain-since-1982) has probably already gone higher in 2022 (https://tradingeconomics.com/united-states/inflation-cpi) and is going higher in many of the places IBM does business (https://tradingeconomics.com/country-list/inflation-rate).

    So for IBM to show "true growth" it needs to add single to double digit growth on top of the inflation rate ... or else it is still contracting, right? I find it very concerning that the corporation forecasts single digit revenue growth when inflation is rising in single (and possibly double) digits, and analysts nod and go "Wow!." True growth is beating inflation and adding on top of that ... ask anyone trying to make wages meet expenses today--including businesses trying to meet payroll. It would be interesting to see how many customers are seeing their billing from IBM going up with the salesman saying, "Hey, it's just inflation." Will they take it or wait until the end of a quarter to get them to drop the prices? I think I know the answer, but that will only be revealed in the 2nd, 3rd and 4th quarters.

    Second - I was fully ready to explain why sales "productivity" gained in 2021 after the Kyndryl spinoff. I mean, the press says it is nothing but baggage that no one but a job-slashing, aggressive-bookkeeping, financial-engineering ex-IBM CFO could love. But what? Sales productivity fell one more time, even after dumping what is usually one of the lower performing organizations when it comes to productivity?

    https://www.discerningreaders.com/arvind-krishna-overall-revenue-profit-productivity-performance.html

    Sales productivity is a hard number to game -- selling off the x86-Server division provides an example of how a short-term gain can be had at the expense of a long term drop (see 2014-15 in the Rometty-Krishna chart at the link above). Here are some hard numbers on revenue to consider and spread around from the link above:

    If an IBM 2021 employee were as productive as in 1999—considering inflation, revenues would have been $126 billion, not $57 billion.

    If an IBM 2021 employee were as productive as a Red Hat 2018 employee—considering inflation, revenues would have been $86 billion, not $57 billion.

    Sure doesn't look like revenue growth to me, rather, it looks like Gallup's engaged employees work and live someplace other than IBM!

    https://www.gallup.com/workplace/321032/employee-engagement-meta-analysis-brief.aspx

    Cheers,

    - Pete

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Other stories you might like

Biting the hand that feeds IT © 1998–2022