IBM’s stock plummeted on Tuesday in its largest single-day loss in its 115-year history, after CEO Arvind Krishna warned investors the computing firm’s latest quarter was “worse than our expectations” while failing to adapt to rising chip costs.
I’m not a stock analyst, but this might be what some folks call “a buying opportunity.”
Krishna’s full statement manages to be both stultifyingly opaque and refreshingly transparent:
When we discussed our expectations with you in April, we noted that we would be wrapping on the launch of z17 in the second quarter. Given this was the strongest start to a mainframe program in our history, we expected Infrastructure revenue to decline low-single digits for the year, beginning this quarter.
What played out was worse than our expectations, driven by a shortfall in our Z performance and the associated software stack, primarily in Transaction Processing. In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases. This dynamic impacted client buying patterns. While we anticipated some supply chain-related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization. In addition, clients were distracted with rapidly-evolving, industry-wide cybersecurity concerns in the quarter.
These conditions require our teams to execute perfectly, and this quarter we faltered. We did not adapt and move quickly enough, and numerous large deals failed to close on the timelines we expected, driving the majority of our shortfall.
Translation: “Our customers are buying stuff we aren’t selling.”
See Also: Techmeme’s coverage.