IBM’s latest quarterly revenues dropped a few per cent but mainframe revenues rose strongly and its storage business grew for the third quarter in a row, albeit at 2 per cent.
Q2 revenues declined 5.4 per cent y/y to $18.1bn and net income slumped 45.5 per cent to $1.36bn as the pandemic discouraged customer spending. That said, Big Blue sees green shoots ahead as enterprise customers adopt more AI and head for hybrid multi-cloud IT.
CEO Arvind Krishna said in prepared remarks: “Our clients see the value of IBM’s hybrid cloud platform, based on open technologies, at a time of unprecedented business disruption.”
He added: “What’s most important to me and to IBM is that we emerge stronger from this environment with a business positioned for growth. And I am confident we can do that.”
The “open technologies” phrase include’s IBM’s acquired Red Hat business which saw revenue rise 17 per cent.
IBM’s business units results were mixed;
- Cloud & Cognitive Software — revenues of $5.7bn y/y, up 3 per cent.
- Global Business Services — revenues of $3.9bn, down 7 per cent.
- Global Technology Services — revenues of $6.3bn, down 8 per cent.
- Systems — revenues of $1.852bn, up 6 per cent. This was made up from Systems hardware rising 13 per cent, with Z mainframes contributing a massive 69 per cent revenue rise, storage systems growing slightly by 2 per cent and poor Power server systems down 28 per cent. Operating system software declined 13 per cent while cloud-based revenues in the systems business grew 22 per cent.
- Global Financing — revenues of $265m, down 25 per cent.
Storage division CMO and VP Eric Herzog told us: “IBM Storage Systems grows for the third quarter in a row with growth of 2 per cent for Q2 2020, following growth of 18 per cent in Q1 2020 and 3 per cent in Q4 2019.”
We added the latest storage revenue number to our chart of IBM’s quarterly storage revenues by calendar year and the third-in-a-row uptick (green line) is clearly seen:
These numbers do not include some IBM storage software sales nor its Cloud Object Storage business as IBM doesn’t reveal these aspects of its overall storage business.
IBM’s second quarter storage results contrast with HPE’s second fiscal 2020 quarter ended April 30. HPE’s storage revenues slumped 18 per cent to $1bn due to “component shortages and supply chain disruptions related to the COVID-19 pandemic”.
They also contrast to NetApp’s fourth fiscal 2020 quarter ended April 24, when revenues dropped 11.9 per cent to $1.4bn as the pandemic struck and exacerbated product and cloud sales weaknesses.