Can Kyndryl Drill IBM and Strike Gold? But Who Drilled Whom?

June 6, 2022

I found it amusing that Big Blue found itself on the wrong side of what I call a deal poaching allegation. The details of the BMC and IBM services for AT&T is interesting. However, a knock on effect of that $1.6 billion dollar settlement has put the estimable IBM spin out Kyndryl in the spotlight. I thought the name “Kyndryl” was one of those pharma products tailored to old people who watched cable news talking heads. Was I wrong? Absolutely. Kyndryl is IBM’s managed services business. The idea for that was that big companies did not want to deal with full time equivalents who kept an organization’s servers chugging along. Let IBM do it was a good business until the sharpies at Amazon, Google, and Microsoft, among others, figured out how to package the cloud to chew into Big Blue’s revenues.

Gulp down a Wal-DRYL and check out “Kyndryl Shares Swoon on Fear It Faces Huge Liability in Lawsuit Against IBM.” The article explains:

Spun out of IBM (ticker: IBM) last year, Kyndryl (KD) is basically IBM’s old managed IT services business. It is a gigantic company with around $18 billion in sales and a workforce of about 90,000 people. But Kyndryl is shrinking at the top line, pays no dividend, and is having trouble finding a constituency among investors. The stock is down more than 50% since the spinoff was completed in November. And now the two companies find themselves on the opposite sides of a legal mess that poses considerable risks for Kyndryl.

What I find interesting is that the incident strikes me as one part of IBM is fighting another part of IBM. Where does the customer fit into this crashing of brilliantly managed entities? I know. Let’s ask Watson. No, let’s check out M-Dryl. Seems less financially risky.

Stephen E Arnold, June 6, 2022


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