Shares of IBM plummeted on the New York Stock Exchange by as much as 10% on Friday after Big Blue reported lower-than-expected earnings for the three months through December.
Topline sales were down across all of IBM's core business units, including the cloud and software segment, which is pivotal to CEO Arvind Krishna's plans to turn around the struggling tech giant. Overall, revenue dropped 6.5% in the fourth quarter to $20 billion, while profits cratered 63% to $1.3 billion.
Speaking to Wall Street analysts on Thursday, Krishna said he expects sales to rebound in 2021. Among other changes, he also touted a "higher tolerance for failure" within the company, part of a broader culture shift at Big Blue.
Despite those assurances, Edward Jones analyst Logan Purk called it a "disappointing quarter for IBM." Still, he remains "optimistic longer term based on IBM's pivot to focus more on cloud- and software-based products, which should support higher growth rates and a higher earnings multiple."