New Supercomputer Does Nothing To Help IBM

The U.S. Department of Energy’s Oak Ridge National Laboratory launched “Summit”, the world’s most powerful supercomputer. The launch offers the chance for several companies to show their technical muscle. First among these is IBM (NYSE: IBM). Like many IBM product releases, the publicity does next to nothing to improves IBM’s dismal financials or help long suffering shareholders.

“Summit” has a dizzying array of extraordinary features. The Oak Ridge National Laboratory’s management wrote:

With a peak performance of 200,000 trillion calculations per second—or 200 petaflops, Summit will be eight times more powerful than ORNL’s previous top-ranked system, Titan. For certain scientific applications, Summit will also be capable of more than three billion billion mixed precision calculations per second, or 3.3 exaops. Summit will provide unprecedented computing power for research in energy, advanced materials and artificial intelligence (AI), among other domains, enabling scientific discoveries that were previously impractical or impossible.

Among the IBM components in the machine, according to the company, are POWER9 chips. The “architecture” which includes these chips has been made available to IBM customers. It remains to be seen if this will meaningfully enhance IBM’s revenue. Since it is so specialized, probably not. However, the project does get to show off IBM’s presence in the artificial intelligence sector.

IBM’s artificial intelligence businesses mostly run under a brand called “Watson.” The promotion of “Watson” to the general public has made it as famous as IBM probably is in some circles. The hugely expensive promotion has probably not helped adoption of IBM products. It has, however, been a large waste of money.

IBM’s shares are down 5% this year to $146, against an advance of the S&P of 3% over the same period. In the last five years, IBM shares are down 27% while the S&P has risen 71%. Whatever IBM’s new products have been, its financial position continues to tumble.

In its most recent quarter, IBM’s management announced revenue of $19.1 billion, up from $18.1 billion in the same quarter the year before. EPS, however, fell from $1.86 to $1.82. As part of the presentation, Ginni Rometty, IBM chairman and CEO, said:

“In the first quarter we maintained momentum in our business, with reported revenue growth in total and across our major segments. These results reinforce that our clients value our innovative technologies, our industry expertise and our commitment and actions for the responsible stewardship of their privacy and data. This is also reflected in our leadership positions in enterprise cloud, AI and security.”

There is little evidence of “leadership” in any of those three sectors.

Press releases, no matter how impressive their contents, won’t get IBM back on track.