IBM Stock Plunges Over 20% After Weak Q2 Results; CEO Admits Tech Giant ‘Faltered'

IBM stock is getting hammered and dragging other software stocks down with it after the tech giant warned clients are pulling back spending.

Shares of International Business Machines (IBM) were down nearly 25% in early trading after CEO Arvind Krishna blamed a weakening software environment for disappointing preliminary results. The move single-handedly shaved over 400 points off the Dow Jones Industrial Average.

Other software stocks also slid, with Salesforce (CRM), Adobe (ADBE), Intuit (INTU), and ServiceNow (NOW) each 3% to 5% lower recently.

Krishna said in a letter to investors that the tech giant “faltered” in the second quarter as some of IBM’s customers cut back on software to focus spending on servers and memory products which have seen prices soar in recent months.

IBM’s warning could be taken as a discouraging sign for other software providers ahead of their earnings.

IBM said Tuesday that it expects second-quarter revenue to come in at $17.2 billion, up 1% year-over-year but below the $17.8 billion analysts had been expecting, per Visible Alpha estimates. IBM said it will likely report earnings per share of $2.27, well below the $2.60 analysts called for, while adjusted EPS is seen coming in at $2.93, closer to the $2.98 analyst consensus.

Investors will get the chance to hear more from IBM executives on the lackluster second-quarter performance and IBM’s outlook for the rest...