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After shocking quarter, IBM insists that AI isn’t killing the mainframe

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On Wednesday, IBM officially reported earnings and the news was as bad as everyone knew it would be.

While the 115-year-old company still generates boatloads of cash — $17.2 billion in revenue, $9.9 billion in gross profit, nearly 58% margins, and $2.2 billion in net earnings for the quarter — its results fell well short of Wall Street’s expectations.

It was such a bad miss that IBM CEO Arvind Krishna and the board took an unprecedented step of warning investors ahead of time that the earnings “was worse than our expectations,” offering everyone a sneak peek.

He published a “letter to investors,” last week sharing preliminary results. It warned of abysmal revenue in the company’s all-important “infrastructure” category and said that profit margins were also going to take a hit. The company’s stock instantly tanked 25%, it’s biggest single-day decline ever. Until then, the stock had performed well under Krishna’s six years of leadership, buoyed by the AI data center boom that had been lifting all boats.

On Wednesday, IBM also lowered its full-year growth forecasts, meaning this horrible quarter would impact the rest of the year. The culprit? IBM’s cash-cow mainframe business was down 42%.

That’s a cascading problem, because as CFO Jim Kavanaugh explained on the quarterly call with investors, IBM earns $3 in software revenue for every $1 of mainframe hardware it sells.

However, the CEO and CFO spent the call insisting that this was a temporary blip and all would be well soon.

What happened, they said, was that “tens” of customers that were due to buy a new mainframe during the quarter opted not to do so. That may not sound like a lot of customers, but mainframes are systems that cost hundreds of thousands to millions of dollars, and with maintenance contracts and software, generate many millions more.

The same AI boom that lifted IBM’s boat also sank it.

Instead of buying a new mainframe, these clients bought other hardware, Krishna explained. They were faced with astronomically high cost increases of 15% to 30% for data center gear and PCs.

“When they were faced with that issue, then they decided to move budget to those areas where they were having that extreme price,” Krishna said.

Enterprise hardware makers like Dell and HP have warned that rising costs on components like memory, caused by the AI build-out boom, have forced them to raise prices. Apple has said the same.

But Krishna promised that those customers will still buy their new mainframes eventually — along with their new software contracts. In fact, he said some of them have already done so this quarter. “We see no evidence of clients moving off the mainframe,” he said.

We’ll have to wait and see. But the tech industry has predicted the death of the mainframe for many decades now. Maybe even AI won’t kill it.

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2027: Nobody can beat Kwankwaso in Kano — Sen Umeh boasts

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The lawmaker representing Anambra Central Senatorial District, Victor Umeh, has said no one can defeat the Nigeria Democratic Congress (NDC) vice-presidential candidate, Rabi’u Kwankwaso, in Kano State.

Senator Umeh expressed this confidence on Friday while fielding questions in an interview on ‘Politics Today’, a programme on Channels Television.

He was speaking on the NDC’s level of preparation for the 2027 general elections.

“No matter the noise they make in Kano, nobody can beat Kwankwaso there once the election is credible, transparent, free, and fair. I can bet it.

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“I’m working with him and other leaders of the party very closely. The party is well more prepared to be an opposition party that will contest this election with very credible candidates.

“Look at what our Rivers State governorship candidate, Dumo Lulu-Briggs, did in Port Harcourt in just first outing. Port Harcourt was shut down.

“Those people following them in Port Harcourt last week are Nigerians that will vote. Why were they following our presidential candidate, Peter Obi like Jesus was crossing, and people were marching around him? Something must be motivating and driving the people, the voting population,” he said.

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Lawal Muiz Steps Up Personal Training, Targets Big NNL Season With Smart City FC

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Smart City FC attacking prospect Lawal Muiz has intensified his personal training programme ahead of the new Nigeria National League (NNL) season, with the youngster determined to translate his skill and attacking qualities into consistent performances for the Lagos club.

Muiz, regarded as an exciting player because of his dribbling ability, creativity and eye for goal, said his major priorities heading into the campaign are improved discipline, greater focus and additional work on the training ground.

The youngster believes the preparations provided by Smart City FC have given the players the platform required to compete, leaving them with the responsibility of delivering when the new season gets underway.

“Ahead of the coming NNL season, the focus is on the goal,” Muiz said.

“As a player, I have decided to increase my own training, become more disciplined and remain focused. The club has provided for us everything that is needed, and it is time for us to do the job.”

Muiz will be hoping to play an important role for Smart City during the campaign, particularly in the attacking areas where his ability to take on defenders and create goalscoring opportunities could prove valuable.

The coming season also represents another opportunity for the youngster to demonstrate his development and establish himself as one of the players to watch in the NNL.

Despite the attention his technical ability has attracted, Muiz is placing greater emphasis on improving his overall game rather than relying on talent alone.

With preparations continuing ahead of the campaign, the Smart City player believes maintaining discipline and putting in additional work will be crucial to achieving both his personal targets and the club’s objectives.

For Muiz, there are no excuses heading into the new season.

The preparations have been made, the opportunity is approaching, and the youngster believes it is now time to deliver on the pitch.

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