its ironic that IBM sold off its x86 pc/server to Lenovo and kept their big iron (mainframe) but now everyone is buying up pc/server due to AI boom. Dell's stock have been surging with the rest of AI stocks
They just need to wait until nobody is selling or can buy new PCs and are forced to use outdated equipment to use as dumb terminals to access those mainframes.
With the caveat that I work for IBM but have no inside knowledge about anything important, it doesn't seem very bad to me? Overall profit is going to be down a tiny amount below expectations.
If I read that as an IBM investor I might fully exit. The new product flopped, growth was 1%, and the CEO sounds extremely unconfident. There are way better places to put your money given the potential for future earnings now looks incredibly weak.
Sure, but a prediction made 3 months ago turns out to be short by a few percent at most, and that leads to a 25%+ drop in the share price? That seems weird to me.
IME you have to be true to what you predict. Whether you're predictably growing, predictably shrinking, or predictably flat if you blow your prediction that's when people start to worry that you don't know what you're doing.
What if the market expected 25% more then reported ? Nobody "knows" what the market expects. People infer it by looking at forward valuation, company guidance, investor expectations, and many many other things happening in the world, in competition, in the value chain. And of course the market does its thing and figures that this company has x% chance of beating (or missing) by $y, and when it's wrong the moves can be huge.
Especially when the expectations are informed by the company’s own guidance about what to expect and they are wrong. It means they missed their own predictions which doesn’t engender confidence.
Depends what happens next. RSUs are taxed as ordinary income at their market value at the time they vest, so it's not necessarily bad if the stock is down.
In fact, the ideal scenario is that the price drops just before your vest and then bounces back up after.
If an employee periodically vests a fixed number of shares, as opposed to a fluctuating dollar amount of shares, this is actually untrue.
Assume an employee's marginal tax rate is 40% and their capital gains rate is 15%. Then there are 2 scenarios:
1. Vest 100 shares at $100 apiece. After tax that's 60 shares * $100 = $6000 total.
2. A sudden price drop causes 100 shares to vest at $50. After tax that's 60 shares * $50 = $3000. Later the price rises to $100 and the employee sells them. Another $3000 in capital gains, leaving $2550 after taxes. Total = $5250.
>2. A sudden price drop causes 100 shares to vest at $50. After tax that's 60 shares * $50 = $3000. [...]
This is only true if you "sell" 40 shares immediately at the time of vesting to pay the tax bill. Because you lose the 40 shares, you don't have as much shares to appreciate in the subsequent upswing. However if you prefer to settle your tax obligations in cash instead, you don't have this issue and you'd actually pay less taxes (assuming the upswing does materialize). It's risky though, because you're basically taking a long position on the stock, and if it falls even more, you'd lose even more money.
This isn't a choice. Sure you can invest more in the stock with external funds but that's not a fair proposition. If you were to tell me there's a certain chance of a stock going up by 100% we could also just buy calls with those magic funds and make far more money.
Worst day, so far* ;-)
its ironic that IBM sold off its x86 pc/server to Lenovo and kept their big iron (mainframe) but now everyone is buying up pc/server due to AI boom. Dell's stock have been surging with the rest of AI stocks
Pretty sad that the company that invented DRAM completely divested itself of actually making any, now that it’s wildly profitable.
They just need to wait until nobody is selling or can buy new PCs and are forced to use outdated equipment to use as dumb terminals to access those mainframes.
And then bounces back.
Go buy it right now, profit tomorrow.
The press release: https://newsroom.ibm.com/2026-07-14-Arvind-Krishnas-Letter-t...
With the caveat that I work for IBM but have no inside knowledge about anything important, it doesn't seem very bad to me? Overall profit is going to be down a tiny amount below expectations.
If I read that as an IBM investor I might fully exit. The new product flopped, growth was 1%, and the CEO sounds extremely unconfident. There are way better places to put your money given the potential for future earnings now looks incredibly weak.
Well, the answer is in your question, it's all about expectations ; the market wanted more, didn't get it, and re-rates.
Sure, but a prediction made 3 months ago turns out to be short by a few percent at most, and that leads to a 25%+ drop in the share price? That seems weird to me.
IME you have to be true to what you predict. Whether you're predictably growing, predictably shrinking, or predictably flat if you blow your prediction that's when people start to worry that you don't know what you're doing.
What if the market expected 25% more then reported ? Nobody "knows" what the market expects. People infer it by looking at forward valuation, company guidance, investor expectations, and many many other things happening in the world, in competition, in the value chain. And of course the market does its thing and figures that this company has x% chance of beating (or missing) by $y, and when it's wrong the moves can be huge.
Especially when the expectations are informed by the company’s own guidance about what to expect and they are wrong. It means they missed their own predictions which doesn’t engender confidence.
This was great timing for IBM employees with RSU's. Many folks had RSUs which literally unlocked this morning.
Great meaning bad?
Depends what happens next. RSUs are taxed as ordinary income at their market value at the time they vest, so it's not necessarily bad if the stock is down.
In fact, the ideal scenario is that the price drops just before your vest and then bounces back up after.
If an employee periodically vests a fixed number of shares, as opposed to a fluctuating dollar amount of shares, this is actually untrue.
Assume an employee's marginal tax rate is 40% and their capital gains rate is 15%. Then there are 2 scenarios:
1. Vest 100 shares at $100 apiece. After tax that's 60 shares * $100 = $6000 total.
2. A sudden price drop causes 100 shares to vest at $50. After tax that's 60 shares * $50 = $3000. Later the price rises to $100 and the employee sells them. Another $3000 in capital gains, leaving $2550 after taxes. Total = $5250.
>2. A sudden price drop causes 100 shares to vest at $50. After tax that's 60 shares * $50 = $3000. [...]
This is only true if you "sell" 40 shares immediately at the time of vesting to pay the tax bill. Because you lose the 40 shares, you don't have as much shares to appreciate in the subsequent upswing. However if you prefer to settle your tax obligations in cash instead, you don't have this issue and you'd actually pay less taxes (assuming the upswing does materialize). It's risky though, because you're basically taking a long position on the stock, and if it falls even more, you'd lose even more money.
This isn't a choice. Sure you can invest more in the stock with external funds but that's not a fair proposition. If you were to tell me there's a certain chance of a stock going up by 100% we could also just buy calls with those magic funds and make far more money.
> This is only true if you "sell" 40 shares immediately at the time of vesting to pay the tax bill
I wasn't aware there's a choice. That's a paycheck withholding essentially.
can you show the math for your last statement?
All over the place in Big Blue land:
Jan 28: IBM Mainframe Business Jumps 67%
https://news.ycombinator.com/item?id=46802376
Feb 13: IBM tripling entry-level jobs after finding the limits of AI adoption
https://news.ycombinator.com/item?id=47009327
Feb 23: IBM Plunges After Anthropic's Latest Update Takes on COBOL
https://news.ycombinator.com/item?id=47128907
Apr 30: Granite 4.1: IBM's 8B Model Matching 32B MoE
https://news.ycombinator.com/item?id=47960507
Jun 25: IBM debuts sub-1 nanometer chip technology
https://news.ycombinator.com/item?id=48674967
Not sure what the title was when submitting, but current title is: IBM is on pace for its worst day ever
> IBM Stock has worst day
(so far)