Opinion: IBM's profit warning shows tech valuations are all in the timing
IBM's worst day in 20 years was a pretty reasonable one for the market. The IT giant's stock fell 25 per cent on Tuesday, but the S&P 500 closed slightly up. In other words, whatever ails "Big Blue" doesn't seem to be rippling across the financial world. Which is strange, because the message encoded in IBM's profit warning has implications for other companies too.
Chief executive Arvind Krishna warned that demand for IBM's mainframe products would shrink faster than previously expected because of a "capex reprioritisation". In plain English, customers are delaying purchases of big-box computers and related services so they can bring forward purchases of servers, storage and memory, where prices are rising. In plainer English: IT budgets may be ample, but they are finite.