IBM loses quarter of its value as tech giant’s shares plunge and profits falter
Summary
IBM’s shares fell more than 25% after the company reported weak profits and lower-than-expected revenue for the second quarter. IBM said its customers shifted spending away from its traditional software products toward buying hardware like servers and memory for AI needs.Key Facts
- IBM’s stock dropped over 25% in one day after releasing preliminary second-quarter results.
- The company reported $17.2 billion in revenue for the quarter, up only 1% from last year and below analyst expectations.
- IBM said corporate customers shifted their spending from software to data center hardware and cybersecurity.
- This shift hurt sales of IBM’s mainframe computers and related software, which handle many daily transactions in industries like banking and airlines.
- Many customers rushed to buy hardware at the end of June to avoid expected price increases caused by supply shortages.
- IBM’s adjusted earnings per share were $2.93, below the $3.02 predicted by analysts.
- The drop in IBM shares also caused broader declines in other software stocks like Microsoft and Salesforce.
- IBM CEO Arvind Krishna said some large deals did not close as expected due to changes in customer spending priorities.
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