Valuetainment - July 17, 2026


“$72B Gone in 48 Hours” - IBM Just Got WRECKED After Earnings Disaster

Topics
IBM mainframe revenue reinventing IBM networking event
Hosted by
Patrick Bet-David
Mentioned
Andy Grove Vinny Arvind Krishna Gordon Moore Don Estridge Al Bundy Dale Stephen Barlett Lewis Gershner Joe Montana Jerry Rice Ron Paul Dan Martel Watson X Adam
“Resign and Step Aside” - Amy Coney Barrett Sounds Off on Death Threats “Industrial Espionage” - Apple Sues OpenAI on Stealing Trade Secrets

Episode Stats


Length

17 minutes

Words per minute

177.76

Word count

3,149

Sentence count

214

Harmful content

Misogyny

1

sentences flagged

Toxicity

1

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

IBM's stock drops 25% in a single day, its worst single-day drop since 1968. After the company pre-announced earnings that fell below Wall Street expectations, analysts had expected IBM to report adjusted earnings per share (EPS) of $3.02 and revenue of $17.86 billion. But the company came up short, posting adjusted EPS of $2.93 and $16.2 billion, and a statement from CEO Arvind Krishna said the company was prepared for a low single-digit decline in its Z17 mainframe business for the quarter.

Transcript

Transcript generated with Whisper (turbo).
Misogyny classifications generated with MilaNLProc/bert-base-uncased-ear-misogyny .
Toxicity classifications generated with s-nlp/roberta_toxicity_classifier .
Topics generated with Qwen2.5-3B-Instruct.
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
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00:00:30.000 IBM. We've heard about IBM for how many decades? Many, many years. Back in the days, IBM was
00:00:33.820 Facebook. Back in the days, IBM was Google. IBM was Microsoft. IBM was what all these companies
00:00:39.460 we talk about today, the first guy was IBM, right? Yesterday, IBM's numbers, you ready? Drops 25%
00:00:50.400 in a single day. Okay, 25% in a single day. Let me read these numbers to you, and then Tom,
00:00:57.220 I'm going to come to you, and Vinny, please get your reports ready.
00:01:00.020 I'm so ready.
00:01:01.260 You have no idea.
00:01:01.780 So IBM ended trading Tuesday down more than 25%,
00:01:06.920 its worst single-day drop since, you ready?
00:01:12.720 1968.
00:01:13.560 Me and Vinny weren't even born yet.
00:01:16.260 Okay?
00:01:17.060 After the company pre-announced earnings that fell below Wall Street expectations,
00:01:22.440 Big Blue attributed the results to customers shifting spending
00:01:25.440 away from a software and a mainframe product
00:01:28.820 and toward AI servers, memory, analytics.
00:01:32.500 Analysts had expected IBM to report adjusted earnings
00:01:34.840 per share EPS of $3.02 on revenue of $17.86 billion,
00:01:40.060 but the company came up short posting adjusted EPS
00:01:43.460 of $2.93 on revenue of $17.2 billion,
00:01:47.780 and a statement IBM CEO, Arvind Krishna,
00:01:51.140 said the company was prepared for a low single-digit decline
00:01:54.160 in its Z17 mainframe, business for the quarter,
00:01:57.720 but the results were far from worse than projected
00:02:00.500 and are at least partially related to the global memory shortage.
00:02:03.920 In the last few weeks of June, we saw clients shift their quarterly capital expenditure
00:02:08.240 towards server, storage, and memory purchase
00:02:10.900 to secure supply-constrained infrastructure ahead of expected price increases, he said.
00:02:16.020 This dynamic impact client buying patterns,
00:02:18.440 while we anticipate some supply chain-related impact in our expectations,
00:02:22.980 Since we did not anticipate the magnitude of the CAPEX reprioritization, he added, IDC's Ashia Natkari, who leads the firm's enterprise infrastructure global research group, wrote in a note that Wall Street's reaction to Kirshner's warning was likely stronger than warranted.
00:02:39.000 Tom, your thoughts on this?
00:02:40.280 Well, first of all, you know what?
00:02:43.220 Arvind Kirshner just didn't do a good earnings report.
00:02:45.820 He didn't do a good job of putting it together.
00:02:48.540 Now, they'll tell you, oh, no, no, no, no.
00:02:50.520 We wrote the release.
00:02:51.560 We're careful with the comments.
00:02:52.660 and he go out there. But all these comments is what makes stock go up and down on confidence
00:02:58.240 and future guidance. It's confidence and future guidance. So Vinny, I'll be head of General
00:03:04.660 Motors. You be an investor. And you tell me if you're going to tell everybody to sell my shares
00:03:11.300 or buy my shares. And I'm going to put it and take all of this technical knowledge. I'm going
00:03:16.160 to put it in terms you understand. Yeah, we here at General Motors, we find that people aren't
00:03:21.260 buying corvettes anymore and we're having a little trouble at the factory we can't get engines
00:03:25.220 and um we don't make evs and they seem popular but everything's okay i don't trust you i don't
00:03:32.660 exactly so i'm going to take off the techno babble and that's what ibm said we have a product that's
00:03:38.740 going away mainframes it's starting to shift memory chips are in shortage we can't get them
00:03:43.520 and there's things we don't make you know we got to get to uh servers in the sky ai servers so
00:03:49.160 that's what happened but there's something else on the backdrop that's been frustrating what are
00:03:53.720 the core that makes a company great it's people it's people we're discovering that just we've
00:04:00.960 been sitting here in rhode island for a week and a half and we're you know pat and i've had these
00:04:04.740 conversations about people we need great people doing great things and we see things that are
00:04:10.540 going on and we see the danger of you know sam altman not having a guy that everybody's rallying
00:04:16.440 around your leader from the outside. IBM has been going through a change. Its own people are
00:04:21.960 referring to it as Indian business machines rather than international business machines.
00:04:27.620 Do you know what the wild shift is? So IBM USA, IBM India, here's a quiz for you. One of them is
00:04:35.600 40,000 employees. One of them has 135,000 employees. Which is which? I think the Indian
00:04:40.780 fund has 140. I think it's the other way around. India has 135,000 employees. IBM USA only has
00:04:48.300 40,000 employees. It's been shifting. It's been shifting on H-1Bs. India, how many job openings,
00:04:56.100 U.S. and India? Which number is which? For IBM. For IBM, 376 job openings and 2,840 job openings
00:05:04.520 this morning I checked. In India. Which one's India? Which one's USA? 376? 9x. 9x more
00:05:10.760 india correct india 2840 job openings for ibm in india 376 available in the usa people are furious
00:05:19.020 and there's been a steady flow of people that have been writing on reddit not screaming at
00:05:23.780 their employer you you scream at your previous employer on facebook or x or something you can
00:05:28.420 expect to get a letter or get sued because especially if you disparage them you do something
00:05:32.540 really bad that's dumb well guess what there are ex ibm employees that are on reddit saying
00:05:37.180 very gently saying listen guys um i just trained two people in india and then i was laid off a year 0.74
00:05:43.560 later and they gave me six months salary but i basically trade trained people that were going
00:05:50.420 to replace me and we're hearing about it all across ibm so it's not just ibm here ibm also
00:05:57.120 right now has a loyalty and an overall morale problem and they'll probably see this podcast
00:06:02.260 pat and publish a bunch of stuff out there but the number of articles and a number of things
00:06:07.040 on reddit is overwhelming there's more to it than just this earnings report ibm has got some issues
00:06:13.580 inside and a lot of people are saying maybe i don't want to be here and there's only 40 000
00:06:19.140 let me ask this question let me ask my dad worked for ibm so here's a question for you they lost
00:06:23.060 72 billion dollars a market cap in two days that's a lot 72 billion a market cap ibm lost
00:06:28.440 can you pull up their stock they lost 72 billion dollars a market cap in two days that's a lot of
00:06:32.600 money here's my question for you when when you when you read uh i've been just in in reading
00:06:38.260 mode while we're out here what what is there is that what one day go to five days go to five days
00:06:44.320 that's one day go to five days look at that i should start buying look at that yeah can you
00:06:49.640 spot when the ceo spoke can you do me a favor go to one year can you go to one year damn okay so
00:06:56.580 Go to five years.
00:06:59.520 So it's still higher than what it was five years ago.
00:07:02.320 Yeah, they rode the AI wave, but now...
00:07:05.120 Yeah, so then, Tom, here's my question for you with IBM.
00:07:08.460 What is their flagship product?
00:07:10.940 What is the product they have that beats everybody else in the marketplace?
00:07:14.980 It used to be the mainframe computer and high-end consulting
00:07:17.940 to go with the use of the mainframe computer.
00:07:20.400 Not used to, I want to know today.
00:07:22.620 What is their flagship product that they're the market leader ahead of everybody?
00:07:27.840 Do they even have one?
00:07:29.400 No, they for sure do.
00:07:30.840 You're not going to be a $200 billion company without having that.
00:07:34.040 So what is that product, Tom?
00:07:35.760 Where do they win?
00:07:37.860 It doesn't have a single consumer-style hero product.
00:07:43.380 IBM Current Story, IBM Z Mainframes, Red Hat OpenShift, and Watson X.
00:07:50.420 I want to know their number one flagship product that brings a big chunk of the revenue.
00:07:55.620 Okay, so I just typed in right now, what are IBM's biggest customers?
00:07:58.600 Their biggest customer is J.P. Morgan Chase.
00:08:01.140 One of IBM's biggest financial customers uses IBM mainframes, cloud, AI, security, and consulting.
00:08:06.980 Their annual money that they spend just J.P. Morgan Chase with IBM is somewhere around a billion dollars.
00:08:13.260 Okay.
00:08:13.800 Bank of America is number two.
00:08:15.480 They use the IBM mainframe software consulting customers, $200 million annually.
00:08:19.860 Citigroup, few hundred million dollars, Verizon, few hundred million dollars, AT&T, few hundred million dollars, and then you got U.S. federal government uses defense civilian agencies, cloud consulting, cybersecurity, billion over multiple contracts, Deutsche Bank, HSBC, Volkswagen, all of these guys have multi-million dollar contracts.
00:08:37.880 Which product brings the biggest percentage of revenue every year to IBM?
00:08:46.220 Which product is that?
00:08:47.260 I want to know.
00:08:49.080 Because there's a story.
00:08:50.280 I believe it's the mainframe business.
00:08:51.680 There's a story of IBM software.
00:08:54.800 Approximately $8.6 billion in 2026.
00:08:57.760 This is the transaction processing single largest software category they have.
00:09:01.720 Number two is the Red Hat hybrid cloud brings in roughly $7.3 billion in 2025.
00:09:10.200 And then IBM brought Red Hat for about $34 billion, what they bought in 2019,
00:09:14.300 betting it would become the bridge between the older enterprises and then consulting,
00:09:18.220 which brings $21 billion.
00:09:19.480 So consulting is still a big part of IBM.
00:09:21.560 Then a mainframe brings $10.6 billion.
00:09:24.780 It's interesting where they're going.
00:09:26.340 It's the mainframe consulting that makes them tons of money.
00:09:28.240 Yeah, I remember reading a book called CEO Excellence, and in the book, if you remember this, it tells the story of what Andy Grove did.
00:09:39.040 I don't know if you remember that, Tom.
00:09:40.580 The story with Andy Grove and where he and the former CEO of, what's the company's called?
00:09:50.500 There it is.
00:09:51.480 Former CEO of Intel.
00:09:53.920 They're sitting there having a conversation together.
00:09:56.360 and Andy Grove, one of their divisions, I think, went from $198 million, Vinny,
00:10:01.320 to $2 million.
00:10:02.280 Let me say that one more time.
00:10:03.820 They went from $198 million to $2 million, one of his divisions, of Intel.
00:10:08.780 In this book, this is how he writes it.
00:10:10.240 The president of the company at the time, Andy Grove, asked CEO Gordon Moore,
00:10:14.520 if we got kicked out and the board brought in a new CEO,
00:10:19.060 what do you think they would do?
00:10:20.440 Moore, the CEO, Gordon Moore, he's the guy,
00:10:23.880 He said, they would get us out of the memory chips game.
00:10:28.620 Grove stared at him and said, why shouldn't you and I walk out the door, come back, and do it ourselves?
00:10:34.620 The rest is history.
00:10:36.420 Intel exited the DRAM memory chips business and staked its future on a new product, a microprocessor.
00:10:43.520 In doing so, Intel helped usher in the computer age and had a runoff success that lasted for decades.
00:10:50.200 I think the scary thing with IBM right now is
00:10:53.260 IBM has to kind of ask themselves, what's next?
00:10:58.340 What is next?
00:10:59.280 What business do they need to get out of?
00:11:01.360 What business do they need to get in that they're not?
00:11:04.260 They've got to make some decisions here
00:11:05.620 because for you to go through a $72 billion in 48 hours,
00:11:09.120 and don't get me wrong, I mean, they're going to be fine.
00:11:10.640 IBM is IBM.
00:11:11.360 It's not like tomorrow something's going to happen to them.
00:11:12.980 This is more like a two-decade type of a thing that we're talking about.
00:11:16.200 Tom, looks like you want to say something.
00:11:17.320 Yeah, no, and the time you're talking about
00:11:19.600 is when IBM made a major shift from old mainframes to new mainframes.
00:11:24.480 And IBM also created the Wintel standard, Windows and Intel.
00:11:28.880 That's exactly the sequence you're talking about.
00:11:30.720 And it was a big milestone for IBM.
00:11:32.760 And by the way, Microsoft, there were two guys at IBM.
00:11:36.440 One of them did not want to give Microsoft the operating system, did not.
00:11:41.220 And the other was Don Estridge did not, and there was one guy that did.
00:11:46.060 Don Estridge would die in the Delta Airlines Windshear flight that crashed in Dallas in 1985.
00:11:52.440 I know this whole story.
00:11:54.340 There's a whole high school named for him in Boca Raton.
00:11:57.220 And when he died, the other guy was left, and he gave the business to Microsoft.
00:12:02.580 If it's not for that Windshear flight in 1985, IBM would have made its own operating system because that kicked off Microsoft.
00:12:10.280 And so IBM shifted at that time to the personal computer.
00:12:13.040 Good or bad move?
00:12:13.800 It ended up being a good move for IBM to shift, but they later got out of the business as it became a commodity.
00:12:20.740 They were never competing with Apple.
00:12:22.460 Apple was always the artsy and other side of it and education.
00:12:26.660 But it showed that IBM and Lewis Gershner wrote a book, Teaching an Elephant to Dance.
00:12:31.740 It was a great book about IBM.
00:12:33.260 So I think they'll be back.
00:12:34.720 But right now, they're in the middle of a shift.
00:12:36.920 They're another shift, and they've got to pick a side, and they've got to move forward.
00:12:40.240 Adam.
00:12:41.180 I'll add something.
00:12:42.140 I got to be honest with you, when we first started talking about this, I was like, yeah, I don't really, IBM, whatever.
00:12:46.240 But I realized something, because I think this is what you were getting at, and it's the whole concept of reinventing yourself.
00:12:51.400 Because to me, IBM is like the guy, like Al Bundy, who scored four touchdowns in high school
00:12:57.000 and was like the best player in his town and went on to play college.
00:13:01.080 But now all these other guys are playing in the NFL and they lapped him.
00:13:05.140 IBM got lapped.
00:13:06.020 I mean, look at all the tech companies, NVIDIA, Apple, Microsoft, Amazon, Tesla.
00:13:11.840 All these big tech companies were started decades after IBM.
00:13:16.380 So to the average person out there, you might have had success 10 years ago, 20 years ago, and you're still kind of like, that's me.
00:13:23.920 I'm that guy. I'm Al Bundy. I scored four touchdowns.
00:13:26.700 I think, Pat, what you're kind of getting is you've got to reinvent yourself, and you've got to be known for one thing.
00:13:30.860 The fact that we all collectively, using our brain power, didn't know what IBM's flagship product was is a telltale sign.
00:13:38.900 IBM, you've got a problem, buddy.
00:13:40.440 We're not in this space.
00:13:41.940 I guarantee if I ask the people that are in this space, they would be able to say it within a heartbeat of who it is.
00:13:46.480 But, again, I think they're going to be fine.
00:13:49.600 Typically, when people that are involved in a situation like this, they'll make adjustments.
00:13:52.900 Hopefully, they will.
00:13:53.520 Every year, we do this one event.
00:13:55.380 It's a very, very special event.
00:13:57.100 Very, very special event.
00:13:58.520 We allow business owners and people to come into our headquarters,
00:14:03.380 where we give you a tour, and we make introductions for people to do business together.
00:14:08.580 Last year, we did the pre-Vault Conference networking event.
00:14:13.080 We're doing it again this year at our property.
00:14:15.400 I'll let you know how to do it.
00:14:16.900 It'll be June 29th at 6 p.m. to 8 p.m.
00:14:20.520 Then some of the folks afterwards will go to our private cigar lounge to network with each other,
00:14:24.800 smoke cigars, have drinks, et cetera, et cetera.
00:14:26.600 I want you to watch what happened here last year at our networking event that we did at
00:14:30.120 our property.
00:14:30.620 Go for it.
00:14:38.040 Recently, our company softball team lost the big game by one run.
00:14:42.300 Then Dale tried to console us with the quote, winning isn't everything.
00:14:46.640 Well, Dale and I are very different.
00:14:50.260 I get early payout from Bet365.
00:14:52.400 If my team goes up big, I get paid out instantly, even if they blow the lead later.
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00:15:22.080 there you go incredible event it was last year so here's how it works
00:15:34.480 anybody that's got a general ticket and a platinum ticket you're invited and you'll be networking
00:15:40.600 with each other executives our staff's going to give you a tour into our property anybody that
00:15:46.260 has a founder ticket the great tom elsewhere is going to give you a tour if you're ceo i will
00:15:51.020 person and give you a tour take you to the studio behind this you're going to see stuff that nobody
00:15:57.120 sees the executive floor our engineers tech room all of it new things that we're building you'll
00:16:02.120 get a glimpse of all that stuff that's taking place so one if you bought the tickets just
00:16:06.400 simply go to the link below and register it's very easy there's a qr code for you to go out
00:16:11.080 and register and verify that you have bought a ticket they'll know number two if you've not bought
00:16:15.540 a ticket and you want to be a part of this a lot of deals get done it's networking pre-developed
00:16:20.160 conference it's our super bowl that we do every year at mgm grand arena august 31st through
00:16:24.440 september 3rd where we go through this 296 page manual together over a four-day period
00:16:29.700 so if you haven't yet bought a ticket like man i gotta go i gotta go i gotta go go to vault
00:16:34.080 2026.com get yourself a ticket worst case scenario coming as a general to network with others it'll
00:16:40.960 be a great event two hours of meeting a lot of great people to do business with you are one
00:16:44.520 contact one relationship away from changing your life and for those guys that are going to the
00:16:48.480 Ball Conference, Jerry Rice, Joe Montana, Logan Paul, Dan Martel, Stephen Barlett from the Diary
00:16:53.220 CEO. And we can't wait to see you guys there, June 29th, 6 p.m. Make sure you get yourself a ticket
00:16:58.900 or go register at the link below. If you enjoyed this video, you want to watch more videos like
00:17:03.600 this, click here. And if you want to watch the entire podcast, click here.
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