IBM recorded its biggest intraday decline in three years, after weak sales figures in its consulting division disappointed investors and overshadowed the impact of the company's acquisition of software company HashiCorp Inc.
The deal is another move by CEO Arvind Krishna to transform this traditional tech hardware company into a focus on high-growth software and services. IBM has also made other acquisitions in this area, such as buying Apptio for $4.6 billion last year and divesting management infrastructure, weather, and health businesses.
But investors are focusing on the possibility of a decline in IBM's second-largest business consulting division. The company said in an announcement on Wednesday that for the first quarter ending March 31, the division's revenue was 5.2 billion US dollars, the same as the same period last year. Total sales increased 1% to $14.5 billion in the first quarter. IBM also reiterated its previous forecast for free cash flow of $12 billion for the fiscal year ending the end of December.
At 12:48 New York time on Thursday, the stock plummeted 9.4% to $166.75. Earlier, it fell 10%, the biggest intraday decline since January 2021. By Wednesday's close, the stock was up 13% this year.