IBM: Why yes, Red Hat is doing great. Thanks for asking. The rest of Big Blue? Sure, wait – someone's at the door...

Fantastic quarter: Sales, down. Profit, down. Business as usual

IBM is talking up the success of its Red Hat as Big Blue continues its efforts to ax losing businesses.

The enterprise IT giant made its newest big acquisition a central focus of its third-quarter financial numbers [PDF], published Wednesday. For the three months to September 30:

  • Revenues of $18bn were down 3.9 per cent from $18.8bn in Q3 FY2018, and short of the $18.2bn analysts had forecast. That makes this latest quarter the fifth in a row of shrinking revenue.
  • Net income was $1.67bn, down 38 per cent from $2.7bn last year.
  • Earnings per share of $2.68 (non-GAAP) topped analyst predictions of $2.66. GAAP EPS of $1.87 missed by $0.35.
  • Red Hat revenues were $371m, up 19 per cent, we're told, while Red Hat's new home group, Cloud and Cognitive, logged $5.3bn in total sales for a 6.4 per cent gain. IBM closed its $34bn acquisition of the Linux distro giant this year.
  • Global Technology Services revenue was $6.7bn, a 5.6 per cent decline as IBM continues to see that part of its business shrink amidst the migration to cloud.
  • Systems revenue was $1.5bn, down 14.7 per cent after IBM was only able to get a week of sales for its new z15 mainframe line before the quarter closed.
  • Global Business Services revenue of $4.1bn was a 1 per cent gain from the year-ago quarter.
  • Global financing revenues were $343m, down 11.7 per cent.
  • While we don't normally note capital expenditure, IBM's is down sharply both on the quarter (from $900m to $700m) and the year to date (from $2.8bn to $1.7bn) as Big Blue looks to cut costs and shave debt. To that point, IBM cut its debt by $7bn during the quarter.

"In the third quarter, as we continued to help clients with their digital reinventions, we grew revenue in our Cloud & Cognitive Software segment and in Global Business Services," said chairman, president, and CEO Ginni Rometty said of the earnings.

"Our results demonstrate that clients see IBM and Red Hat as a powerful combination and they trust us to provide them with the open hybrid cloud technology, innovation and industry expertise to help them shift their mission-critical workloads to the cloud."

Ginni Rometty

You've got (Ginni's) mail! Judge orders IBM to cough up CEO, execs' internal memos in age-discrim legal battle


Naturally, IBM is looking to play up the growth in Red Hat's sales, arguing that the software developer will take off with Big Blue's hardware and sales might behind it.

"We're very pleased," IBM senior VP and CFO Jim Kavanaugh told financial analysts on a conference call today, "and I think this is an instantiation and validation of the power of bringing IBM and Red Hat together and how it is better for our customers and shareholders overall."

Investors were not so pleased. The revenue miss pushed IBM shares down 5.41 per cent in after-hours trading. ®

Other stories you might like

  • DigitalOcean sets sail for serverless seas with Functions feature
    Might be something for those who find AWS, Azure, GCP overly complex

    DigitalOcean dipped its toes in the serverless seas Tuesday with the launch of a Functions service it's positioning as a developer-friendly alternative to Amazon Web Services Lambda, Microsoft Azure Functions, and Google Cloud Functions.

    The platform enables developers to deploy blocks or snippets of code without concern for the underlying infrastructure, hence the name serverless. However, according to DigitalOcean Chief Product Officer Gabe Monroy, most serverless platforms are challenging to use and require developers to rewrite their apps for the new architecture. The ultimate goal being to structure, or restructure, an application into bits of code that only run when events occur, without having to provision servers and stand up and leave running a full stack.

    "Competing solutions are not doing a great job at meeting developers where they are with workloads that are already running today," Monroy told The Register.

    Continue reading
  • Patch now: Zoom chat messages can infect PCs, Macs, phones with malware
    Google Project Zero blows lid off bug involving that old chestnut: XML parsing

    Zoom has fixed a security flaw in its video-conferencing software that a miscreant could exploit with chat messages to potentially execute malicious code on a victim's device.

    The bug, tracked as CVE-2022-22787, received a CVSS severity score of 5.9 out of 10, making it a medium-severity vulnerability. It affects Zoom Client for Meetings running on Android, iOS, Linux, macOS and Windows systems before version 5.10.0, and users should download the latest version of the software to protect against this arbitrary remote-code-execution vulnerability.

    The upshot is that someone who can send you chat messages could cause your vulnerable Zoom client app to install malicious code, such as malware and spyware, from an arbitrary server. Exploiting this is a bit involved, so crooks may not jump on it, but you should still update your app.

    Continue reading
  • Google says it would release its photorealistic DALL-E 2 rival – but this AI is too prejudiced for you to use
    It has this weird habit of drawing stereotyped White people, team admit

    DALL·E 2 may have to cede its throne as the most impressive image-generating AI to Google, which has revealed its own text-to-image model called Imagen.

    Like OpenAI's DALL·E 2, Google's system outputs images of stuff based on written prompts from users. Ask it for a vulture flying off with a laptop in its claws and you'll perhaps get just that, all generated on the fly.

    A quick glance at Imagen's website shows off some of the pictures it's created (and Google has carefully curated), such as a blue jay perched on a pile of macarons, a robot couple enjoying wine in front of the Eiffel Tower, or Imagen's own name sprouting from a book. According to the team, "human raters exceedingly prefer Imagen over all other models in both image-text alignment and image fidelity," but they would say that, wouldn't they.

    Continue reading

Biting the hand that feeds IT © 1998–2022