IBM Falls on Doubts Over Software Rebound — SkimNews
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- IBM reported a third-quarter software revenue rebound, but BofA Global Research noted about $250 million stemmed from deals delayed from Q2, tempering the strength of the improvement.
- IBM raised its annual software revenue growth outlook to 7–8%, up from 6–8%, yet maintained its overall revenue forecast, signaling limited confidence in broader momentum.
- Arvind Krishna said the 9% growth in transaction processing software tied to mainframes is unlikely to continue, expecting a 'normalized performance' in 2024.
- James Kavanaugh previously attributed second-quarter weakness to declines in mainframe hardware and software, which subtracted over five points from growth.
- Bernstein analysts interpreted IBM’s guidance as indicating a slight dip in transaction processing sales in Q4 as the benefit from delayed deals fades.
- IBM stock fell 6.5% in premarket trading and was down nearly 3% at open, on track to lose over $15 billion in market value if losses hold.
- At least eight brokerages have raised their price targets on IBM, according to LSEG data, despite broader skepticism about the durability of its software performance.
Why it matters: IBM’s market value could drop by more than $15 billion as investors weigh a temporary software boost against flat overall revenue guidance and fading tailwinds in its core transaction processing unit, undermining confidence in sustained turnaround momentum.
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