- Doges canceled contracts could cost IBM up to $ 100 million
- IBM’s consultancy is worth $ 5.1 billion, down 2% year-over-year
- IBM still knocks on revenue growth and notes that the interest in artificial intelligence
IBM CFO James Kavanaugh has revealed 15 federal contracts between the US government and the tech giant had been canceled, paused or suspended as a result of Elon Musk’s Doge efficiency initiative that potentially cost the company up to $ 100 million.
Both Kavanaugh and IBM CEO Arvind Krishna later neglected the effect of Doge’s cuts and quoted them as a small fraction of their $ 30 billion consultant demand.
“This is like less than $ 100 million backlog over a duration of several years,” Kavanaugh said.
IBM is losing US government contracts due to DODE
The news came when IBM announced its results from the first quarter of the financial year 2025 and noticed a slight increase of 1% over the year in revenue to $ 14.5 billion.
When we talked about the lost contracts, Kavanaugh said, “While no one is immune, we are absolutely focused on monitoring identity dynamic process.”
According to Techcrunch Reporting accounts for federal contracts around 5-10% of IBM’s consultancy, but Krishna emphasized that most contracts are for critical services such as veterans’ benefits, GSA purchases and payroll systems, therefore only a small part of its contracts are considered vulnerable to cuts.
Consultant revenue for the company in Q1 accounted for $ 5.1 billion, or about 35% of its total revenue, but they were down with 2% year-over-year. Its infrastructure business experienced a steeper fall of 6% in quarterly revenue, while software increased with an increase of 7% in revenue to $ 6.3 billion.
“While the macroeconomic environment is fluid, based on what we know today, we maintain our full -year expectations for turnover growth and free cash flow,” Krishna said, noting that interest in generative AI is continuing to rise.
The news comes in the same month that the US Department of Defense shared a staggering $ 5.1 billion in savings by canceling contracts, bringing its dove-divided savings to almost $ 6 billion.
