IBM beat Wall Street's expectations for both revenue and income in the first quarter of 2025, but its stock price still dropped more than six percent in after-hours trading.

Some share of the blame for the dip may belong to [1]DOGE , the US government data-scouring, cost-trimming operation unofficially overseen by Tesla and SpaceX oligarch Elon Musk.

IBM CFO Jim Kavanaugh [2]told the media DOGE recommendations to the White House caused 15 of its contracts with government agencies to be cancelled, paused, or suspended, amounting to about $100 million in future payments.

IBM's consulting business is more susceptible to discretionary pullbacks and DOGE-related initiatives

During Big Blue’s quarterly earnings conference call with Wall Street, he revised those remarks, referring to "a handful of contracts" and cited a financial impact of less than $100 million.

Also on the call, CEO Arvind Krishna acknowledged "a couple of contracts" were impacted in Q1, such as the IT giant's deal with USAID – the foreign aid agency gutted by DOGE. But he downplayed the impact of contract cancellations even as he declined to make predictions about future quarters.

[3]

Among clients directly affected by current government policies, slower spending may follow, said Krishna, adding that IBM's consulting business "is also more susceptible to discretionary pullbacks and DOGE-related initiatives."

[4]

[5]

More generally, Krishna said that uncertainty over President Trump's on-off-on-off import tariffs and government upheaval may cause customers to pause spending.

Overall revenues rose one percent year on year to $14.5 billion, with consulting revenue ($5.1 billion) down two percent for the quarter and software revenue ($6.3 billion) up seven points, according to IBM's [6]financial statement for the quarter.

[7]

Big Blue's infrastructure segment – the hoary old mainframe, midrange server, and storage business – reported revenues of $2.9 billion, down six percent.

"We exceeded expectations for revenue, profitability and free cash flow in the quarter, led by strength across our Software portfolio," said Krishna in a statement. "There continues to be strong demand for generative AI and our book of business stands at more than $6 billion inception-to-date, up more than $1 billion in the quarter."

He added that IBM is sticking with its revenue growth expectations.

[8]Elon Musk makes another cut – to his time at DOGE

[9]Trump blinks: 'Substantially' lower China tariffs promised

[10]IBM orders US sales to locate near customers or offices

[11]IBM shareholders asked to back greater lobbying transparency

Q1 saw the [12]settlement of a long-running lawsuit with Global Foundries, the acquisition of HashiCorp, and the announcement of plans to acquire DataStax.

IBM also took $300 million in workforce balancing charges, compared to $400 million in Q1 2024. Company insiders told The Register last month that [13]thousands of US jobs have been cut. ®

Get our [14]Tech Resources



[1] https://search.theregister.com/?q=DOGE

[2] https://www.bloomberg.com/news/articles/2025-04-23/ibm-posts-sales-topping-estimates-says-doge-hit-15-contracts

[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aAm3bLVhSZ2ySD3sB9OM8gAAA08&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0

[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aAm3bLVhSZ2ySD3sB9OM8gAAA08&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aAm3bLVhSZ2ySD3sB9OM8gAAA08&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0

[6] https://newsroom.ibm.com/2025-04-23-ibm-releases-first-quarter-results

[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aAm3bLVhSZ2ySD3sB9OM8gAAA08&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[8] https://www.theregister.com/2025/04/22/elon_musk_doge/

[9] https://www.theregister.com/2025/04/23/us_china_tariff_reduction_plan/

[10] https://www.theregister.com/2025/04/18/ibm_orders_us_sales_staff/

[11] https://www.theregister.com/2025/04/11/ibm_shareholders_asked_to_back/

[12] https://www.theregister.com/2025/01/03/ibm_globalfoundries_settle_lawsuits/

[13] https://www.theregister.com/2025/03/20/ibm_cuts_us_jobs/

[14] https://whitepapers.theregister.com/