IBM Brushes Off Software Shortfall as Execution Issue

IBM CEO Arvind Krishna acknowledged that the company experienced a shortfall in its second quarter software sales, but attributed it to 'execution' rather than a fundamental shift in customer demand. According to Krishna, the shortfall was limited to capex-sensitive areas of IBM's portfolio and was largely due to a sudden shift by customers towards supply chain-constrained hardware and cybersecurity-focused software.

Krisha noted that this shift led to a delay in closing several large deals, which accounted for the majority of the shortfall. However, he claimed that about one-third of these delayed deals have since closed, with the expectation that two-thirds to three-quarters will close within the next six months.

Krishna emphasized IBM's confidence in its business and ability to grow and drive shareholder value remains unchanged. He highlighted the company's plans to increase use of AI to scale software development, bolster sales and marketing efforts, and optimize supply chains.