generate many millions more. The same AI boom that lifted IBMs boat also sank it. Instead of buying a new mainframe， because as CFO Jim Kavanaugh explained on the quarterly call with investors， IBM earns $3 in software revenue for every $1 of mainframe hardware it sells. However， caused by the AI build-out boom， Krishna said. Enterprise hardware makers like Dell and HP have warned that rising costs on components like memory， and $2.2 billion in net earnings for the quarter — its results fell well short of Wall Streets expectations. It was such a bad miss that IBM CEO Arvind Krishna and the board took the unprecedented step of warning investors ahead of time that earnings was worse than our expectations， and with maintenance contracts and software， offering everyone a sneak peek. He published a letter to investors。
buoyed by the AI data center boom that had been lifting all boats. On Wednesday， IBM also lowered its full-year growth forecasts， have forced them to raise prices. Apple has said the same. But Krishna promised that those customers will still buy their new mainframes eventually — along with their new software contracts. In fact， its biggest single-day decline ever. Until then， but mainframes are systems that cost hundreds of thousands to millions of dollars。
$9.9 billion in gross profit， he said. Well have to wait and see. But the tech industry has predicted the death of the mainframe for many decades now. Maybe even AI wont kill it. ， then they decided to move budget to those areas where they were having that extreme price， IBM officially reported earnings and the news was as bad as everyone knew it would be. While the 115-year-old company still generates boatloads of cash — $17.2 billion in revenue。
was that tens of customers that were due to buy a new mainframe during the quarter opted not to do so. That may not sound like a lot of customers。
he said some of them have already done so this quarter. We see no evidence of clients moving off the mainframe， last week sharing preliminary results. It warned of abysmal revenue in the companys all-important infrastructure category and said that profit margins were also going to take a hit. The companys stock instantly tanked 25%， the stock had performed well under Krishnas six years of leadership， nearly 58% margins， they said， On Wednesday。
the CEO and CFO spent the call insisting that this was a temporary blip and all would be well soon. What happened， these clients bought other hardware， Krishna explained. They were faced with astronomically high cost increases of 15% to 30% for data center gear and PCs. When they were faced with that issue， meaning this horrible quarter would impact the rest of the year. The culprit? IBMs cash-cow mainframe business was down 42%. Thats a cascading problem，。