IBM 2021 Q3 Earnings Report Observations

IBM’s third-quarter earnings report hit the streets on October 20th, and the reaction wasn’t positive. The media buzz concentrated on lower-than-expected revenue, casting a bright light on the “legacy” elements as the cause of the downward pull. The company dimmed that light and discussion, explaining that the disappointing financial resultswere more “slight pause” than a “disruption.”

Emphasizing the impending November 3rd, 2021 spinoff of managed infrastructure services business Kyndryl, IBM downplayed the risk of missing future revenue targets due to the resulting split of existing customer contracts.  Kyndryl lands on November 4th with an established customer base, including 75 of the Fortune 100.  Many of those customers rely on mission-critical COBOL applications. Customer renewals will be split between the two companies (IBM and Kyndryl), and that may offer a glimmer of hope for customers seeing year over year mainframe cost increases.  For these customers, change brings opportunity.

Change Brings Opportunity

Will existing Kyndryl customers look for opportunities to reduce their costs and expand the value of their contract at renewal time? CloudFrame thinks they will, and it will drive the need and urgency to examine the continued reliance and risk of COBOL.

What’s your opinion of the future of IBM earnings and the emergence of managed infrastructure services provider Kyndryl? If you see a change in your mainframe COBOL future – let’s talk.

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