IBM shares fell as much as 23% on Tuesday, marking the company's worst single-day drop on record and surpassing its previous worst day set on Oct. 19, 1987, during Black Monday. The selloff followed preliminary second-quarter results that came in well below Wall Street's expectations.
The company reported adjusted earnings of $2.93 per share on revenue of $17.2 billion, missing analyst forecasts of $3.01 per share and $17.86 billion in revenue. CEO Arvind Krishna pointed to weakness in IBM's software and infrastructure businesses, with mainframe-related infrastructure sales dropping 7% as clients shifted spending toward servers, storage, and memory purchases ahead of anticipated price increases.
IBM also acknowledged internal execution failures, stating that numerous large deals failed to close on the timelines expected, and that cybersecurity concerns had diverted management's attention during the quarter. The steep drop erased tens of billions of dollars in market value in a single session.