IBM shares fell about 5% in Thursday trading even after the company reported strong third-quarter results, a sign that investors are still wary following a shocking earnings warning the company issued in July. That July warning sent IBM stock down roughly 25% in a single session, a decline that surpassed the company's previous worst trading day, during the 1987 Black Monday crash.
What went wrong in July
The July selloff followed a preliminary disclosure that IBM's adjusted earnings and revenue would come in well below analyst expectations. CEO Arvind Krishna said clients had sharply reprioritized their capital spending in the final weeks of June, shifting funds away from IBM's traditional software and infrastructure business and toward hardware purchases like servers, storage and memory chips, as a severe memory chip shortage drove prices higher and pushed customers to prioritize hardware over other IT spending.
