IBM Cites Execution Issues as Cause for Recent Software Shortfall

IBM CEO Arvind Krishna attributed the company's recent software shortfall to execution issues rather than a shift in customer spending priorities. Speaking during IBM's Q2 earnings call, Krishna noted that the shortfall was limited to capex-sensitive areas of the portfolio.

Krisha added that while some customers shifted their spending towards supply chain-constrained hardware and cybersecurity-focused software, this move away from IBM's core competencies was 'not destruction' but rather a deferral. The CEO stated that about one-third of the delayed deals had since closed, exceeding initial expectations.

IBM CFO James Kavanaugh also weighed in on the matter, explaining that clients were prioritizing server, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases. This shift led to the delay of large deals, accounting for the majority of the shortfall.