Red Hat continues to grow, but IBM’s struggles continue – TechCrunch

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IBM Was in the middle of Strategic shift Since then, we have focused on hybrid cloud and AI Arvind Krishna has been promoted Became CEO last year. Software company Red Hat I bought it for $ 34 billion 2018 was at the heart of it all.With Companies reporting revenue Yesterday, the financial performance was pretty bleak, but at least Red Hat It continues to grow at a vibrant pace.

Overall, the company announced quarterly sales of $ 17.62 billion, below analysts’ expectations of $ 17.77 billion. To CNBC report.. On the bright side, it grew at a very modest 0.3% year-on-year. It may not sound very good, Positive earnings were difficult Coming for Big Blue in the last 10 years.

Cloud and cognitive software business units, including Red Hat, increased 2.5% to $ 5.69 billion. At a earnings meeting with analysts after the report hit, CFO Jim Cavana showed that Red Hat grew 17% quarterly. “Red Hat’s revenue growth was driven by double-digit growth in both infrastructure and application development, as well as emerging technologies, and OpenShift’s recurring revenue increased by more than 40%,” said the company’s container orchestration. Mentioned the platform.

That was good news. The bad news is that they need to hire technical talent to keep up with demand, and that talent is becoming more expensive and reducing their margins. “In the highly competitive labor market, this puts some pressure on our labor costs, including higher acquisition and retention costs, which are not yet reflected in current pricing. This in future engagement. We expect to gain value, but it will take some time before it appears in the margin profile, “he said.

So Red Hat isn’t a problem, but IBM needs to find a way to squeeze more out of the core enterprise. Holger Mueller, an analyst at Constellation Research, needs to grow Red Hat further by doing a better job to convince him that he is a truly neutral player in the hybrid cloud market, simply selling IBM services. He states that he is not thinking about doing it.

“IBM has not fully established itself as the” Switzerland “in the cloud by allowing enterprises to use Red Hat to circumvent lock-ins. It’s a good service, but it doesn’t come to mind for CxOs, “Mueller said.

Meanwhile, the company Infrastructure Services Sector Spinout To another company as announced last year.It is seen as a move to solidify the company Around the cloud and AI strategyHowever, there is some financial pain from losing that income from the balance sheet when the transaction is finalized next month.

Other key parts of the company, such as global services, fell 5%, while system revenue fell significantly by 12%. Global consulting is the only bright spot, growing 12%.

IBM has made some progress here, but not enough, not fast enough, albeit in stages. Stock prices have been hit today by falling 9.56% at the closing price of the market. Shareholders clearly want to see more, and while Red Hat is leading, other parts of the company are lagging behind and investors aren’t happy.

Red Hat continues to grow, but IBM’s struggles continue – TechCrunch Source link Red Hat continues to grow, but IBM’s struggles continue – TechCrunch

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