International Business Machines shares sank as much as 23 percent in premarket trading on Tuesday after the technology company released preliminary second-quarter results that fell well below Wall Street forecasts, triggering a broader selloff across the software sector.
IBM posted revenue of $17.2 billion and adjusted earnings of $2.93 per share, compared with analyst estimates of roughly $17.86 billion in sales and $3.02 per share. Chief Executive Arvind Krishna said clients redirected spending toward servers, storage, and memory purchases in the final weeks of June to lock in supply-constrained infrastructure ahead of anticipated price increases.
Krishna acknowledged that IBM did not anticipate the magnitude of the spending shift and that the company had falter ed in adapting quickly enough, with several large deals failing to close as planned.