“$72B Gone in 48 Hours” - IBM Just Got WRECKED After Earnings Disaster

**SPEAKER_1** (0:00)
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**Patrick Bet-David** (0:30)
IBM, we've heard about IBM for how many decades? Many, many years. Back in the days, IBM was Facebook. Back in the days, IBM was Google, IBM was Microsoft. IBM was what all these companies we talk about today. The first guy was IBM, right? Yesterday, IBM's numbers, you ready? Drops 25 percent in a single day. Ouch. Okay? 25 percent in a single day. Let me read these numbers to you, and then Tom, I want to come to you, and Vinny, please get your reports ready. I'm so ready. You have no idea. Okay, so IBM ended trading Tuesday down more than 25 percent. It's worst single day drop since, you ready? 1968 Me and Vinny weren't even born yet.
Okay? After the company pre-announced earnings that fell below Wall Street expectations, Big Blue attributed the results to customer shifting, spanning away from software and mainframe product and toward AI servers, memory.
Analysts had expected IBM to report adjusted earnings per share EPS of $3.02 on revenue of $17.86 billion, but the company came up short posting adjusted EPS of $2.93 on revenue of $17.2 billion, and the statement IBM CEO Arvind Krishna said the company was prepared for a low single-digit decline in its Z17 mainframe business for the quarter, but the results were far from worse than projected and are at least partially related to the global memory shortage. In the last few weeks of June, we saw clients shift their quarterly capital expenditure towards server storage and memory purchase to secure supply constraint infrastructure ahead of expected price increases, he said. This dynamic impact, client-buying patterns, while we anticipate some supply chain-related impact in our expectations, we did not anticipate the magnitude of the Capex re-prioritization, he added. IDC's Ashish Natkari, who leads the firm's enterprise infrastructure global research group, wrote in a note that Wall Street's reaction to Krishna's warning was likely stronger than warranted. Tom, your thoughts on this?

**Tom Ellsworth** (2:40)
Well, first of all, you know what?
Arvind Krishna just didn't do a good earnings report. He didn't do a good job of putting it together. Now, they'll tell you, oh, no, no, no, no, we wrote the release, we careful with the comments, and he go out there. But all these comments is what makes stock go up and down on confidence and future guidance. It's confidence and future guidance. So Vinny, I'll be head of General Motors, you be an investor. Okay. And you tell me if you're going to tell everybody to sell my shares or buy my shares.
And I'm going to put it in and take all of this technical knowledge. I'm going to put it in terms you understand. Yeah, we here at General Motors, we find that people aren't buying corvettes anymore. And we're having a little trouble at the factory. We can't get engines. And we don't make EVs and they seem popular. But everything's okay.

**Vinny** (3:31)
I don't trust you.

**Tom Ellsworth** (3:33)
So I'm going to take off the techno babble. And that's what IBM said. We have a product that's going away mainframes. It's starting to shift. Memory chips are in shortage. We can't get them. And there's things we don't make. We got to get to servers in the sky, AI servers. So that's what happened. But there's something else on the backdrop that's been frustrating. What are the core that makes a company great? It's people. It's people. We're discovering that just... We've been sitting here in Rhode Island for a week and a half, and Pat and I have had these conversations about people. We need great people doing great things, and we see things that are going on, and we see the danger of Sam Altman not having a guy that everybody's rallying around your leader from the outside.
IBM has been going through a change. Its own people are referring to it as Indian business machines rather than international business machines. Do you know what the wild shift is?
So IBM USA, IBM India. Here's a quiz for you.
One of them is 40,000 employees, one of them is 135,000 employees, which is which?

**Patrick Bet-David** (4:40)
I think the Indian one has 140

**Vinny** (4:42)
I think it's the other way around.

**Tom Ellsworth** (4:44)
Correct, India has 135,000 employees, IBM USA only has 40,000 employees. It's been shifting, and it's been shifting on H1Bs. India, how many job openings? US and India, which number is which?