Overview
- On July 14 the company issued an unscheduled preliminary second‑quarter update that showed revenue of about $17.2 billion and adjusted EPS of $2.93, missing Street forecasts and triggering a roughly 25% one‑day drop that erased about $68–69 billion in market value.
- IBM said many large software and mainframe transactions failed to close on time because customers rushed to buy supply‑constrained servers, storage and memory for AI projects, while its distributed infrastructure business grew about 37% and software slowed to roughly 5% growth.
- CEO Arvind Krishna acknowledged in a letter that “this quarter we faltered” and the board reviewed the situation before the early disclosure, steps that intensified investor concern about the company’s sales‑funnel visibility.
- Management says some slipped deals and a reported distributed infrastructure backlog could convert in later quarters, but analysts have downgraded the stock as the market reevaluates whether the miss is a timing issue or a sign of structural demand shift.
- The setback undercuts the rerating that followed years of acquisitions and earlier AI momentum and leaves investors watching the company’s detailed earnings disclosure for proof that pipeline visibility and software growth can recover.