IBM Stock Drops Amid Revenue Shortfall in Transactional Software
IBM's stock price has dropped 12.9% over the past three months to $239.94, about 73% of its 52-week high.
The company's transactional software revenue fell 9% in the June quarter due to tens of large deals that failed to close on time, accounting for most of the shortfall.
However, IBM's software revenue grew nicely at 1%, with 80% being recurring. The other 20% is transactional, sold through enterprise license agreements that clients buy alongside mainframe hardware and book as capital spending.
CFO describes a multiplier at more than $3 of software for every dollar of hardware landed.
Management says clients redirected spending towards servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases, with some alternate purchases rising 30% in dollar value quarter to quarter.