IBM Delivers 2Q21 Win

IBM’s latest quarterly earnings (2Q21) are finally getting  interesting now that it has put years of quarterly losses into the past, at least for now. And finally the company has started gaining traction with hybrid clouds. Total cloud revenue in the quarter was $7.0 billion.

IBM and Red Hat announce hybrid cloud software

In fact, the company credits cloud computing for its record highest quarterly sales growth in over 2 years. It almost makes you forget the recent years of incessant quarterly losses. CFO James Kavanaugh prefers to cheer on the strong spending by clients in retail, manufacturing, and travel in the US. And who can blame him?

He continues: Sales from its cloud computing services jumped 21 percent while the company experienced a sales decline in global technology services.  So much for the excitement around IBM’s Kyndryl services restructuring although it may be too soon to expect to see much from that.

Here’s how Reuters explained the Kyndryl thing: The plan to separate was announced in 2020, which DancingDinosaur reported at that time. It followed years of IBM trimming its legacy businesses as it increasingly focused on its cloud offerings to counter slowing software sales and seasonal demand for its mainframe servers–DancingDinosaur wouldn’t exactly call it seasonal; sales increases invariably followed each upgrade of the Z. BTW, those cloud offerings were specifically tagged for hybrid clouds

So, how are you going to treat Kyndryl? Will you include it in a proposal? Will you buy from it, grant it credibility? If it delivers the same high quality IT services you expect at a competitive price and in a timeframe that meets your needs why not give it a consideration?

DancingDinosaur will be watching to see how other top tier IT services providers respond. In the meantime Kyndryl came out respectfully in IBM 2Q statement:  The impact of the Kyndryl separation costs for second-quarter 2021 was ($0.15) per share.

Sales from IBM’s cloud computing services jumped 21 percent to $6.5 billion) in the quarter. The 109-year-old firm is preparing to split itself into two public companies, with the namesake firm narrowing its focus on the so-called hybrid cloud, where it sees a $1 trillion market opportunity. The company did record a sales decline in global technology services, but added it was largely offset by a rise in revenue in the remaining three units, including a surprise growth in the business that hosts mainframe computers.

Mainframe saw strong traction from the financial services industry, where its banking clients shopped for more capacity as trading volumes soared during the retail trading frenzy, CFO added Kavanaugh said. The pandemic wasn’t bad for every business.

“I am glad to see that strategic projects, which are IBM’s bread and butter, are coming back,” added Patrick Moorhead, analyst at Moor Insights & Strategy. He noted: systems and global business services growth was a surprise on the cloud.

IBM revenue rose nearly 1 percent to $17.73 billion in the quarter, beating analysts’ average estimate of $17.35 billion, according to IBES data from Refinitiv.

Net income fell to $955 million in the quarter ended March 31, from $1.18 billion compared to a year earlier. Overall, the company earned $1.77 per share, beating market expectation of $1.63. 

Is that good enough? DancingDinosaur isn’t an investor so it won’t offer an opinion. However, it is nice not to be writing about incessant losses quarter after quarter.

DancingDinosaur is Alan Radding, a veteran information technology analyst, writer, and ghostwriter. Follow DancingDinosaur on Twitter, @mainframeblog. See more of his work at technologywriter.com.

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