Connect with us

News

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

info

Published

on

Arvind at Think.jpeg

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.

When you purchase through links in our articles, we may earn a small commission. This doesn’t affect our editorial independence.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

News

Nwabali Appears Good Enough To Start For Super Eagles Against Russia On Tuesday

info

Published

on

IMG 20261004 WA0006.jpg

Back-to-form Chippa United of South Africa goalkeeper, Stanley Nwabali appears good enough to start for Nigeria against Russia in Tuesday’s international friendly match between both nations.

Sports247 gathered that, although many Nigerian football fans slammed Nwabali for letting in three goals during last Tuesday’s 2027 Africa Cup of Nations qualifier defeat away to Guinea-Bissau, Eagles’ coach, Eric Chelle is keeping faith with him.

A strong hint in this direction emerged from reports citing Nwabali in training with the Eagles on arrival in Moscow ahead of Tuesday’s game, which comes exactly a week after the Nigerian team’s ignominious 3-0 loss to Guinea-Bissau, who now top their qualifying group with six points.

The friendly with Russia was initially meant to help Chelle test new players ahead of the resumption of AFCON 2027 qualifiers in November, but the report from the team’s camp in Moscow indicates that the Franco-Malian tactician will now count on some of his established regulars for Tuesday’s game.

Information provided by the communications department of Nigeria Football Federation (NFF) revealed that Nwabali was one of prominent Eagles’ players who were involved in the team’s first training session ahead of Tuesday’s game.

The report disclosed, “The Super Eagles have had their first training session in Nizhny Novgorod, as they prepare for Tuesday’s international friendly match against Russia’s senior men national team.

“The group of 17 players that trained on Saturday included 101-cap Moses Simon, goalkeeper Stanley Nwabali, defenders Benjamin Fredricks and Emmanuel Fernandez, as well as forwards Kelechi Iheanacho and Akor Adams.

“The team will have two more training sessions on Sunday and Monday before the encounter (which is scheduled to take place) at the Nizhny Novgorod Stadium on Tuesday evening.

“On 6 June last year, Russia and Nigeria played to a 1-1 draw at Moscow’s Luzhniki Stadium, with the Russians going in front through an own goal by defender Semi Ajayi, before Tolu Arokodare levelled for the Super Eagles.”

Sports247 gathered further that, while Nwabali appears set to start the game on Tuesday, he will likely bow at half time and give way to Charlton Athletic of England’s new signing, Arthur Okonkwo, who is the preferred first choice of many Nigerian football fans.

Continue Reading

News

2027: Don’t weaponize religion, ethnicity, regional sentiments – CAN charges politicians 

info

Published

on

CAN.jpg

Ahead of the 2027 general elections, the Christian Association of Nigeria, CAN, has called on political actors to place Nigeria above their personal interest.

CAN made the call when its President, Archbishop Daniel Okoh addressed the press as part of the activities to mark its 50th anniversary.

“We expect political campaigns to be issue-based and focused on competing ideas about how to improve the lives of Nigerians.

Political parties and candidates must resist the temptation to weaponize religion, ethnicity and regional sentiments,” Archbishop Okoh said.

Recommended

The apex Christian body noted that Nigerians have witnessed enough bloodshed and division during election periods, adding, “We do not want another generation of Nigerian youths sacrificed on the altar of political ambition.”

CAN called on political leaders to take responsibility for the conduct of their supporters and discourage incitement, hate speech, violence and intimidation.

“Every Nigerian must be free to vote according to his or her conscience, without coercion, intimidation or manipulation,” Okoh added.

CAN said it will continue to support credible democratic processes, civic education, peaceful elections and electoral integrity.

“Our message to politicians is clear: Elections should be a contest of ideas, not a contest of violence; a competition for public service, not a licence for personal destruction,” he stated.

Speaking further, CAN said it is deeply concerned about the economic hardship confronting ordinary Nigerians.

“The rising cost of living has placed enormous pressure on families. Young people are struggling to find meaningful employment. Small businesses are struggling to survive. Parents are finding it increasingly difficult to provide food, healthcare, education and housing for their families,” CAN noted.

“The Church sees these realities every day.

People come into our churches not only with spiritual needs but with hunger, unemployment, medical bills, school fees, housing challenges and uncertainty about the future.

“We, therefore, encourage government to continue pursuing policies that stimulate productive economic activity, create meaningful employment, support small and medium-sized enterprises and protect the most vulnerable members of society.

“Every economic policy must ultimately be judged by its impact on the people. Economic reform cannot become an abstract exercise divorced from the realities of ordinary families. 

“We must also learn as a nation to raise and place in public office leaders who understand that public office is a trust and not an opportunity for personal enrichment,” Okoh said.

Continue Reading

Trending