IBM Admits Execution Shortfall, Sees Rebound as Customers Shift Towards AI-Focused Software

IBM CEO Arvind Krishna acknowledged that the company's execution was not up to par in its second quarter, but expressed confidence in its ability to rebound. The shortfall was mainly due to a sudden shift by customers towards hardware components and AI-focused software outside of IBM's traditional offerings.

This shift led to the postponement of 'low 10s' of large deals that were expected to close during the quarter, resulting in a double-digit number of missed targets. However, Krishna noted that about one-third of these deals have already closed since the end of June.

Krisha attributed this short fall to execution issues and emphasized IBM's strong conviction in its business growth and ability to drive shareholder value. He pointed out that the company is adapting to deliver greater business value to clients around innovation, and greater economic value to better align with client priorities.