IBM cuts outlook as software and mainframe weakness weighs on results
A week after shocking investors with a disappointing preliminary earnings forecast that missed estimates, IBM Corp. today reported financial results that missed estimates on both revenue and profit.
The company also lowered its full-year revenue forecast, blaming customers’ shifting their spending on mainframes and software to artificial intelligence infrastructure. However, executives insisted the changes are only temporary and that the core mainframe market remains strong.
The results confirmed weaknesses IBM disclosed last week, when Chief Executive Arvind Krishna (pictured) acknowledged that the company “faltered” in responding to an abrupt change in customer spending. IBM shares fell 25% following that warning, their biggest one-day decline in a century.
The reversal was particularly striking in the wake of the company’s bullish comments three months ao after it exceeded revenue and earnings estimates in the first quarter, with software revenue growing 8% and infrastructure revenue rising 12% at constant currency.
