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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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Nigeria now full authoritarian state under Tinubu— PDP 

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The Peoples Democratic Party, PDP, has accused the administration of President Bola Tinubu of turning Nigeria into a “full authoritarian state,” citing alleged erosion of democratic institutions, suppression of dissent and weakening of checks and balances.

The PDP made the allegation in a statement signed by its National Publicity Secretary, Interim National Working Committee, Ini Ememobong, on Saturday.

The statement reads in full, “The report by the Human Rights Foundation, in its latest global assessment, classifying Nigeria as a fully authoritarian regime is a mere global confirmation of the local reality that Nigerians have been facing under the APC-led Federal Government. The report confirms the faulty electoral process, absence of protection for dissent, erosion of democratic safeguards and the obvious collapse of checks and balances on the executive by critical national institutions.

“The report published on the foundation’s Tyranny Tracker platform, tyrannytracker.org, shows that the country performed abysmally low on all the critical pillars of its assessment, indicating a full descent into authoritarianism, which is incompatible with democratic tenets.

“It is worthy of note that the assessment parameters of the foundation align with the theoretical frameworks that have identified, analysed and condemned authoritarian regimes-being the rule by a dictator and a small group, or a single party; the absence of institutional checks and balances; loss or apprehension of freedom of speech; opposition targeting; and weak and fake elections. 

“It does not take any high degree of intelligence for anybody to agree with the report, because all the indicators of authoritarianism are present in Nigeria, under this Tinubu regime.

“A few examples from the numerous anomalies experienced by Nigerians will suffice here-the recent deployment of uncivilised and uncouth media attacks by officials of the administration to attack Cardinal Onaiyekan, the Catholic Bishops Conference of Nigeria, the Catholic Church and Christianity generally.

“This incident is one of many which eloquently attest to the absence of freedom of speech under this administration. What did the cleric say that is not the lived experience of Nigerians, except, of course, the few who are isolated from reality and their paid human megaphones? 

“The complete failure of the National Assembly to offer any form of meaningful checks to the executive is not a secret-else how could an administration fail to execute the Appropriation Act for three years, and yet that administration gets commendation, instead of condemnation, from the legislature? A parliament that ignores or blatantly disrespects the country’s constitution and its own standing rules during critical legislative activities cannot offer credible oversight of the executive. 

“What is left, which the administration has doubled down on, is the fact that the 2027 elections are designed as a mere formality, far from reflecting the people’s wishes through the ballot.

“We call on the Tinubu APC administration to immediately take critical steps to de-escalate the political tensions emanating from actions traceable to their officials and their proxies, in the interest of the survival of democracy. 

“The continuous asphyxiation of the opposition, clear weaponisation of security agencies against real and perceived opponents, increasing signs of partisanship by the electoral umpire, and reckless deployment of combustible political rhetoric by the President and his handlers should cease. 

“The President must realise that there are two contests embedded in the 2027 Presidential elections-the presidency and the country. An attempt to focus on winning the former at all costs may result in the loss of the latter; and only a free, fair, credible and peaceful contest can guarantee a win for both coveted prizes.

“We urge Nigerians to continue to demand accountability from their leaders at all levels, as this is the irreducible minimum that democracy provides.”

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Canada Delegation: Wrong for president’s aide to lead elected governors on foreign mission – ADC

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The African Democratic Congress, ADC, has faulted the selection of a presidential aide, to lead a delegation of state governors to a foreign mission.

In a post on X, the National Publicity Secretary of the ADC, Bolaji Abdullahi, said it was absurd for a personal aide to the president and and his Chief of Staff, Femi Gbajabiamila to lead elected governors on such a mission.

Recall that President Tinubu had approved a Federal Government delegation led by Gbajabiamila to represent Nigeria at the maiden Nigeria Diaspora Investment Economic Conference in Toronto, Canada.

The delegation includes Borno State Governor, Babagana Zulum, Anambra State Governor, Chukwuma Soludo, Kaduna State Governor, Uba Sani, Plateau State Governor, Caleb Mutfwang and Zamfara State Governor, Dauda Lawal, as well as some ministers.

In an outrage over the president’s decision, the ADC spokesman said, “Just when you think that you have seen the worst of this Tinubu government, they will just surprise you.

“How can the President’s Chief of Staff, an unelected personal aide of the president, lead elected state governors on a foreign mission. It is well,” he tweeted.

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