RALEIGH – IBM paid a whopping $34 billion for Raleigh-based Red Hat- one of the biggest tech mergers ever and the largest such deal in the history of North Carolina. So Wall Street investors have been waiting to see what the Hatters would contribute. And in the first full quarter of results since the merger closed in July IBM’s chief financial officer is praising the results.

In a conference call with analysts Wednesday, James Kavanaugh spelled out the details, including the fact that Red Hat has added 1,000 workers in recent months and delivered 20 percent growth in revenue. He was very upbeat even though IBM’s revenue declined.

He started with cloud computing, which IBM chair and CEO Ginni Rometty has said over and over was crucial to the merger decision.

“Across our segments, our cloud revenue growth accelerated to 14%, and IBM’s cloud revenue over the last year is now over $20 billion. We’re entering the next chapter of cloud, which will be driven by mission-critical workloads. Enterprise clients will need to securely deploy, run and manage these workloads across on-prem, private and public cloud environments. …

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“Red Hat is at the center of this with the No. 1 Linux operating system, RHEL [Red Hat Enterprise Linux], and the leading hybrid cloud platform, OpenShift. When we bring these together with IBM’s enterprise incumbency, scale and expertise, we’re ideally positioned to lead in the significant hybrid cloud opportunity. We’ve invested to bring new innovations to market … We have standardized on Red Hat OpenShift as our hybrid cloud platform, and we’ve modernized our software portfolio so that it can run on all private and public clouds.

“We’ve announced OpenShift on IBM Cloud and on IBM Z [new mainframes], and we’ve introduced consulting and technology services for Red Hat to capitalize on our expertise in digital reinventions and our leadership position in managing mission-critical workloads.”

Then Kavanaugh talked revenue growth.

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“And now at the end of the third quarter, we’re off to a great start. As I said, Red Hat revenue in the quarter was up 20%. That’s normalized to provide a better comparability to Red Hat’s historical performance. But remember, IBM’s reported results also include the deferred revenue purchase accounting adjustment, which, by the way, was within $30 million of the third quarter estimates we provided in early August.

“The 20% growth is an acceleration from Red Hat’s performance before we announced the transaction. This quarter, Red Hat’s infrastructure business, which is predominantly RHEL, had double-digit growth and continue to take share. This is a great proof point of the continued importance of Linux as the foundation for enterprise workloads in a hybrid cloud [mix of private and public infrastructure] environment. And momentum continued in application development and emerging technologies driven by both OpenShift and Ansible [built around a startup by the same name that launched in Durham and was acquired by Red Hat.] We’re adding new OpenShift clients and expanding Red Hat adoption in existing clients.

“For example, in the third quarter, IBM helped Red Hat expand its footprint at Visa in support of the client strategy of accelerating technology platform innovation using open source solutions.”

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Next, he talked manpower.

“The expansion of the client base and the revenue trajectory are good indications of our clients’ confidence in the value of Red Hat and IBM together. And in terms of confidence of the workforce, over the last several months, Red Hat hired about 1,000 new associates to address the growing demand for the Red Hat portfolio and hybrid cloud value proposition, while employee attrition has been stable year to year.”

Read the full transcript online.