IBM CEO Discloses Weak Figures Early, Stock Plunges 25%
IBM CEO Arvind Krishna explained why he disclosed weak quarterly figures before the company's earnings call on July 22. The decision was guided by an established leadership rule that calls for addressing difficult issues early.
Krishna said that delaying the disclosure would have extended questions about IBM's response, rather than focusing on corrective steps during the earnings call.
The preliminary results showed second-quarter revenue of $17.2 billion, up 1% from the previous year. However, infrastructure revenue fell 7%, while software revenue increased 5%. Red Hat revenue grew 11%, and distributed infrastructure revenue rose 37%.
Krishna attributed the shortfall to clients shifting capital spending towards servers, storage, and memory late in June due to scarcity of equipment before expected price increases. He also mentioned that several large deals missed their expected closing dates, accounting for most of the shortfall.