Red Hat in, Kyndryl out as IBM New Zealand reports a positive 2021

Red Hat in, Kyndryl out as IBM New Zealand reports a positive 2021

Results reflect the spin-off of IBM's managed infrastructure services business as Kyndryl.

Credit: ID 116971842 © Josefkubes |

IBM New Zealand's financial results for the year to the end of December 2021 reflected massive global changes at the company known as "Big Blue".

For the first time since IBM's 2019 buyout, Red Hat has been consolidated into the local subsidiary's numbers while its local managed infrastructure service business, spun out in early September 2021 as part of New York listed Kyndryl, has been reported separately.

The end result for IBM NZ was a large increase in revenue from continuing operations, with sales surging to $172.4 million in 2021 from a restated $124.9 million in 2020.

Red Hat NZ, which was consolidated into IBM's numbers from 1 January 2021, also reported its local revenue for the year separately at $23.2 million, up from $14.7 million in 2020.

The business now known as Kyndryl earned $85.7 million in 2020 and $53.1 million in the ten months up to separation in 2021.

Breaking down IBM NZ's revenue from continuing operations, software sales rose from $57.7 million to $82.6 million, consulting from $19.4 million to $26.3 million and infrastructure from $35.3 million to $53.4 million.

Profit before tax from continuing operations grew significantly from $11.2 million to $38.2 million. However, after tax and the impact of an impairment booked on the discontinued Kyndryl business, IBM NZ reported a net profit for the year of $17.6 million, up from $9.6 million.

The accounts show IBM NZ performed a goodwill assessment and on sale recognised an impairment of $16 million on the Kyndryl business.

The business would no longer benefit from IBM’s brand name, it said, which could lead to potential loss of customers, a note in the financial statements said. In addition, customers would no longer benefit from the integrated solutions from both MIS and non-MIS goods or services and would need to procure these separately.

"Therefore, this may result in a loss in value in MIS business on a stand-alone basis as opposed to the business being managed together with other line of businesses under a single company in IBM," the statements noted.

"Deterioration in economic conditions over the past year in light of the global pandemic, changing client priorities and behaviors and increasing competition also resulted in the loss of value in MIS business."

Kyndryl NZ is now led a former IBMer Audrey Campbell-Frear who joined the company after a stint as general manager of innovation and new business at Olivado. She spent nearly four years at IBM between 2007 to 2011, as business development manager and client services executive.

Her CV also features over six years at network software developer Mavenir as country manager for New Zealand and the Pacific Islands and nearly 12 years at Spark as a senior manager.

Kyndryl NZ also wooed Yolanda Stead as head of alliances for A/NZ. She was focusing on deepening our relationships with key hyperscalers and other partners in the region, Kyndryl told Reseller News.

"Our footprint in government continues to be strong, having won a $21 million contract with the Victorian Department of Education late last year, as well as being certified by Australia’s Digital Transformation Agency (DTA) as a certified strategic service provider for our Government zCloud offering in January this year - the highest level of cloud services certification attainable," Kyndryl said in a statement.

On top of global alliance efforts, Kyndryl announced a multi-year agreement with CDC Data Centres in April to design and manage a customised environment within CDC’s facilities across A/NZ. 

"This provides customers in both Australia and New Zealand with a resilient, managed infrastructure environment where they can harness advanced cloud technologies from the hyperscaler of their choosing," the company's statement said.

Work on establishing new local partnerships in New Zealand was also under way.

"A key focus has been developing our capabilities to ensure supply meets demand when it comes to the skills needed to deliver customer outcomes," Kyndryl told Reseller News

"As part of this, our HR team has been working with operations and the learning organisation to ensure a significant proportion of our employee base in A/NZ develop contemporary skills around key technologies such as Microsoft, AWS and VMware that are needed to deliver higher-value work for customers."

IBM was asked for comment, but referred Reseller News to its global second quarter results announcement released earlier this week. The company reported revenue of $15.5 billion, up 9 per cent.

"We are a faster-growing, focused, disciplined company with sound business fundamentals," said James Kavanaugh, IBM senior vice president and chief financial officer. "Our recurring revenue stream and solid cash generation position us well to continue to invest in R&D, acquire new companies, and strengthen our talent in every part of the business, while also returning value to shareholders through our dividend."

Kyndryl is now a major customer of IBM.

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