IBM shares plunged in pre-market trading on Tuesday after the technology giant reported worse-than-expected financial results and said customers were cutting back on spending on the company’s AI infrastructure and software products.
The company’s shares were scheduled to open nearly 23% lower at about 7:45 a.m. ET, an hour and a half before the market opened. Monday’s closing price was $290 per share, and Tuesday it was scheduled to open at $224.
The plunge in IBM’s stock price came after the company reported “underperforming” second-quarter results for its software and infrastructure division related to the rollout of its new z17 mainframe designed to handle AI workloads.
“We had a weak quarter this quarter,” IBM CEO Arvind Krishna said in a letter to investors released Tuesday. “We did not adapt and move quickly enough, and many large deals did not close on the timelines we had hoped, causing a large portion of the shortfall.”
Krishna said the main reason for the weaker-than-expected results was that customers reduced spending on IBM products and re-prioritized capital spending to “purchases of servers, storage and memory” ahead of “anticipated price increases.”
IBM reported second-quarter companywide revenue of $17.2 billion, up 1%, but missed analysts’ expectations. Infrastructure segment revenue fell 7%.
This is a developing story.