IBM Sees Rebound from Q2 Software Shortfall
IBM CEO Arvind Krishna attributed the company's second-quarter software shortfall to execution issues rather than a fundamental problem with its business. The vendor saw a sudden shift in customer spending from IBM's traditional software and infrastructure offerings towards AI-focused hardware components.
In prepared remarks, Krishna said that about one-third of the 'low 10s' deals that slipped have already closed since the end of June. He noted that normally, two-thirds to three-fourths of these deals would close within six months, and this early rebound is a positive sign for IBM.
Krishna emphasized that IBM's conviction in its business remains unchanged despite the short-term challenges. The company plans to increase the use of AI to help scale software development, bolster sales and marketing efforts, and optimize its supply chain. This strategy aims to enhance IBM's margin and free cash flow commitments while improving its ability to capture growth.