IBM became known as “Big Blue” in the 1970s. Now, IBM is singing the blues after its worst trading day in its 115-year(!) history.
As reported by Tatiana Sataua in Fortune (‘We did not adapt and move quickly enough’: IBM CEO’s admission of weakness fails to prevent historic 25% stock crash, available here), IBM shares tumbled Tuesday as CEO Arvind Krishna acknowledged in an unusual letter to investors that the company had failed to adapt quickly enough, a blunt admission that followed a surprise earnings miss and sent the stock toward its worst drop in decades.
“These conditions [in markets] require our teams to execute perfectly, and this quarter we faltered,” Krishna wrote. “We did not adapt and move quickly enough, and numerous large deals failed to close on the timelines we expected.”
Krishna pointed to weakness in its software and infrastructure businesses driven by a shift in client activity. The CEO attributed the shortfall in part to a late-quarter change in client behavior, with several large transactions slipping into future quarters.
Holger Mueller, VP and principal analyst at Constellation Research, said enterprises are diverting capital expenditure to “other platforms” with mainframe upgrades and purchases, IBM’s typical bread and butter, getting delayed. “That is rare, as it is critical infrastructure,” Mueller added, but it definitely “shows the AI pull” in this market.
The delay has broader implications for IBM’s business, where hardware sales often drive software revenue.
“The impact on IBM is double,” Mueller said. “On one side, it hits hardware and infrastructure, but it also affects software, as mainframe sales typically trigger direct software revenue.”
Since taking over IBM as CEO in 2020, Krishna has worked to reposition IBM around “AI and hybrid cloud” aiming to modernize the company and compete in a rapidly evolving market.
This is the company that played a pivotal role in shaping modern computing. Its accomplishments include developing the highly influential System/360 mainframe architecture in 1964, helping establish the personal computer market with the IBM PC in 1981, pioneering hard disk storage and relational database research, and contributing numerous breakthroughs in semiconductor technology. IBM researchers have also won multiple Nobel Prizes and have earned more U.S. patents than almost any other company for decades.
IBM became known as “Big Blue” during the 1970s due to the company’s signature blue mainframe computers, the blue suits traditionally worn by IBM employees, and the company’s reputation as a large, dependable technology powerhouse.
I got my initial computer education on IBM computers. In my freshman year of college, I used an IBM System/3 that actually used punch cards for its programming (yes, I’m that old!), an IBM 4331 mainframe my junior year and IBM PCs – with dual floppies, no less – in my senior year. It was a terrific education in the advancement of computer technology over a few brief years.
What has IBM done lately? This is the company that became a leader in enterprise AI with IBM Watson, which famously defeated two champions – current host Ken Jennings and Brad Rutter – on the quiz show Jeopardy! in 2011. And their annual Cost of a Data Breach Report (here is the 2025 edition) is a regular resource for useful cybersecurity trends.
When it comes to AI discussions these days, however, you don’t hear IBM mentioned much with other leaders like OpenAI, Anthropic, Google and Microsoft. Those last two companies have been around a while too – maybe not 115 years, but long enough to reinvent themselves for today’s AI. IBM seems to be falling short in that regard. Will they become another Intel, or will they rebound and re-establish themselves as a leader in today’s AI-centric world? We’ll see. But it’s clear that Big Blue is singing the blues these days.
So, what do you think? Is IBM still relevant? Please share any comments you might have or if you’d like to know more about a particular topic.
Image created using DALL-E 3, using the term “robot executive reacting with horror seeing their company’s stock drop on a workstation”.
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