🧠IBM warns of weaker results, shares tumble

Shares of IBM $IBM are falling sharply after the tech company released preliminary second-quarter results that missed analyst expectations. The company now expects revenue of about $17.2 billion, while the LSEG market consensus was around $17.86 billion. Adjusted earnings should be $2.93 per share, compared to the expected $3.02.

Revenue should still rise about 1% year-over-year. However, performance across its business segments remains uneven. Software revenue is expected to increase 5%, the consulting segment is flat, and infrastructure revenue is expected to decline 7%. IBM also expects a year-over-year drop in earnings per share and a 90-basis-point contraction in pre-tax margin to 14.4%.

CEO Arvind Krishna said that results were impacted by a shift in customer spending toward hardware needed for artificial intelligence, particularly servers, data storage, and memory chips. According to the company, some clients rushed to buy this infrastructure ahead of expected price increases. IBM also admitted it was unable to react quickly enough to the shift in spending priorities and several large deals failed to close by quarter-end.

In reaction, IBM shares are down approximately 26%.

So far these are only preliminary figures. IBM is set to release its complete second-quarter results and updated outlook on July 22.

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