news
Red Hat growth slows, IBM lays off lots of workers
-
Computer World ☛ IBM to cut thousands of jobs as Red Hat growth slows
The timing of the cuts is notable. Three weeks before announcing the layoffs, IBM reported slowing growth in Red Hat, its highest-margin hybrid cloud business, and the centerpiece of CEO Arvind Krishna’s transformation strategy.
IBM’s third-quarter earnings report on October 22 showed software revenue growth of 10% to $7.2 billion. Within that segment, the Red Hat hybrid cloud unit grew 14%, down from 16% in the prior quarter. Analysts had expected 16% growth.
Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research, said the deceleration reflects internal execution challenges. “This shift exposes delivery strain inside a business unit expected to move faster than it currently does,” Gogia said. “While enterprise clients continue to view IBM as a dependable partner in complex environments, the way hybrid cloud is bought and measured has changed. Organisations are no longer buying platforms in isolation. They are buying the ability to act quickly.”
Red Hat is central to CEO Arvind Krishna’s strategy to shift IBM toward higher-margin software and cloud services. During the earnings call, Krishna said he expects Red Hat to return to “mid-teen percentage growth, or close to that level, entering 2026.”
[...]
The issue typically affects projects that cross organizational boundaries, such as deployments that combine Red Hat with consulting services or blend software delivery with infrastructure planning.
-
Raleigh News And Observer ☛ IBM lays off as big Triangle employer leans on AI and Raleigh’s Red Hat software
IBM plans to cut thousands of jobs by the end of the year as the large Triangle employer and owner of the Raleigh software provider Red Hat continues its swing toward software and artificial intelligence.
More on Red Hat:
-
IBM Confirms Layoffs Impacting Up to 5,000 Workers as It Shifts Focus to AI
The emphasis on software follows a strong performance in IBM’s recent earnings report, where software revenue jumped 10%. However, growth in a key part of the hybrid cloud business, Red Hat, has recently slowed, which analysts believe could be a factor prompting the current restructuring.
-
IBM to cut thousands of jobs to focus on software segment
The largest segment was software with revenue of $7.2bn. Hybrid cloud – including Red Hat – increased 14 percent, below the expected 16 percent. Following the earnings call, IBM shares dipped around five percent, and have yet to recover.