IBM
The mainframe orders that never arrived
IBM has reported a weak quarter, with results falling below Wall Street’s expectations.
The company still made $17.2bn in revenue and $2.2bn in profit. However, falling infrastructure sales and lower margins caused concern.
IBM had already warned investors that results would be worse than expected.
Its shares then fell 25%, the biggest one-day drop in the company’s history.
The main problem was IBM’s mainframe business, where revenue fell 42%.
This also affects software sales, as IBM earns around $3 in software revenue for every $1 of mainframe hardware sold.
Here’s what you should know:
Mainframe revenue fell 42%.
Some customers delayed purchases due to higher technology costs.
IBM lowered its growth forecast but expects sales to recover.
The cheque is allegedly coming
IBM said several customers delayed buying new mainframes because rising data centre and PC costs forced them to spend their budgets elsewhere.
AI demand has pushed up the cost of key components, leading companies such as Dell, HP and Apple to raise prices.
IBM believes these customers will still place their orders later and says some already have.
Imagine being a 115-year-old tech company and having “tens” of customers ruin your entire week. - MG