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IBM shares slide after CEO admits company moved too slowly
IBM guided second-quarter revenue of $17.2 billion and EPS of $2.93, falling short of analyst estimates.
International Business Machines Corp. shares fell sharply after the company released preliminary results and issued guidance that missed Wall Street targets. IBM shares were down 26% year-to-date and closed about 25% lower on July 14, following the earnings update.
IBM guided for second-quarter revenue of $17.2 billion and earnings per share of $2.93, versus analyst expectations of $17.86 billion and $3.01, according to Yahoo Finance. In comments included with the release, CEO Arvind Krishna said the company did not adapt and move quickly enough.
The coverage also highlighted that customers shifted spending toward hardware purchases such as memory chips, server equipment and storage products, which factored into the CEO’s critique of how IBM responded. After the update, Citi cut IBM’s price target to $245 from $255 while keeping a Buy rating, and Argus reduced its target to $280 from $360, also maintaining a Buy rating.
Yahoo Finance noted that the sell-side adjustments reflected updated modeling for IBM’s growth outlook, including revenue, margin expansion and cash flow assumptions. The story also referenced CNBC host Jim Cramer’s discussion of the “surprise” being Krishna’s admission.