IBM CEO Stands by Early Earnings Warning Amid Historic Stock Plunge

IBM's CEO Arvind Krishna defended his decision to issue an early warning of weaker earnings, which led to a 25% drop in the company's stock value. The disclosure was made eight days before the scheduled quarterly results on July 22.

Krishna said that announcing the expected shortfall ahead of time allowed the company to focus on solutions rather than explanations during the investor discussion. He noted that the weak quarter reflects a delay in customer spending, not a permanent loss of business.

The company's revenue growth was reduced by more than $600 million due to customers deferring infrastructure projects to pay for rising costs of supply-constrained data center hardware and competing demands on technology budgets. Krishna pointed to the progress of large infrastructure projects as evidence that at least some deferred spending will return.