JAKARTA - IBM shares fell more than 23 percent in premarket trading Tuesday after the technology company's preliminary second-quarter results missed market estimates.
According to an Anadolu Agency report quoted on Tuesday, July 14, IBM posted an adjusted profit of 2.93 US dollars per share with revenue of 17.2 billion US dollars during the three months ended June.
Revenue still grew 1 percent compared to the same period last year. Adjusted earnings per share also rose 5 percent. However, both figures remain below analysts' estimates.
Software revenue rose 5 percent year-on-year. Consulting revenue was unchanged, while infrastructure revenue fell 7 percent.
IBM CEO Arvind Krishna said the weaker-than-expected results were influenced by customer decisions to shift capital spending to servers, data storage devices, and memory chips.
The change occurred in the last weeks of June. Customers are trying to secure infrastructure devices whose supply is limited before prices are expected to rise.
IBM has estimated the impact of supply chain constraints, but did not expect the change in customer spending priorities to be that large.
"We do not anticipate a large change in the magnitude of these capital expenditure priorities," Krishna said in a letter to investors quoted by Anadolu.
Krishna also admitted that there were problems in the settlement of transactions internally at IBM. A number of large transactions were not completed according to schedule and were the main cause of the company's profit falling short of expectations.
"This condition requires our team to work without mistakes, and in this quarter we failed," he said.
The performance of the mainframe computer infrastructure business and transaction processing software also weighed on the quarterly results. Mainframes are large-capacity computers that companies use to process transactions and data in very large quantities.
IBM recorded an adjusted gross profit margin of 59.4 percent, down 70 basis points compared to the previous year. The 70 basis point decline is equivalent to 0.7 percentage points.
IBM's free cash flow during the first half of 2026 reached 4.8 billion US dollars.
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