RESEARCH TRIANGLE PARK – Arvind Krishna, IBM’s chair and executive officer, singled out Raleigh-based Red Hat for praise during Big Blue’s earnings conference call with analysts on Wednesday even as the tech giant reported a mix of results that sent shares down several percentage points in after-hours trading.

Noting comments from Chief Financial Officer James Kavanaugh, Krishna conceded IBM (NYSE: IBM) “could’ve done better.”

“As actually even Jim acknowledged that we fell maybe a 0.5-point short of our own expectations and we could’ve done better,” Krishna told analysts.

“Here is where I see it doing better.

“First, the one that performed exactly according to what we wanted was Red Hat. Red Hat gave us 17%, which is pretty much what we wanted and expected. If I now look at our transaction processing platform, it was a little bit below what we would like, because we have been saying that in a long-term model that should be more mid-single digit decliner, but this quarter it was a high single-digit decliner. We think that as we get past, because that is coupled, I won’t call it identical, but it is coupled to some of the infrastructure cycles. I expect that to come back starting in early ’22 or maybe late in ’21.

“Then on our category that is today called AI applications, we were minus 1%. There I would expect us to get back to mid-single-digit growth.”

Total revenue increased slightly year-over-year to just north of $17 billion.

Red Hat and its role in cloud computing services is essential to IBM’s future fortunes.

IBM also is moving rapidly toward the spinoff of its Kyndryl group by early next month.

“We have made further progress in the Kyndryl separation in the last two weeks and announced a distribution date of November 3rd, which is ahead of our original schedule,” Krishna said during the call. “We have done a lot to prepare Kyndryl for this moment. We took structural actions to improve the profit profile. The management team is in place. Employee transfers and the vast majority of client contract novations are complete. We are now even more certain that separating this business creates value through focus. That said, the people of GTS [Global Technology Services] have been a part of IBM for a long time. Hence, it is with mixed emotions that we are reporting on this segment for the last time.