Deferral, not destruction - one dodgy quarter isn't the end of the world, insists IBM CEO Arvind Krishna as the AI buying shift hits home

https://diginomica.com/sites/default/files/images/2022-01/Screenshot%202022-01-25%20at%2011.06.30.png

We were warned it would be messy and so it was. Just over a week ago, IBM suffered its largest one day share price drop in its history when it pre-announced that the shift in buying patterns on the back of the AI hype cycle is undermining its traditional sources of revenue.

CapEx spending has shifted toward servers, storage and memory as enterprises look to avoid being impacted by the infrastructure supply-chain shortfall as demand outstrips capacity. CEO Arvind Khrisna admitted:

While we anticipated some supply chain-related impact in our expectations, we did not anticipate the magnitude of the CapEx re-prioritization.

It was something of a perfect storm for Big Blue. Co-inciding with the shift towards hardware spend, IBM missed its mainframe sales targets, saw software growth slow, and turned in flat consulting performance.

So, the firm issued an earnings warning, triggered a 25% collapse in its share price, and...

Copyright of this story solely belongs to diginomica.com. To see the full text click HERE

Read more