IBM shares fall more than 20% after second-quarter results miss estimates

International Business Machines shares fell more than 20% in premarket trading after the company released preliminary second-quarter results that missed analyst expectations. The hardware, software and consulting provider reported adjusted earnings of $2.93 a share on revenue of $17.2 billion. Analysts had projected earnings of $3.01 a share and revenue of $17.86 billion, according to FactSet.

CEO statement CEO Arvind Krishna attributed the shortfall to weakness in the software and infrastructure businesses. Clients shifted spending toward hardware purchases such as memory chips in the final weeks of June. "In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases," Krishna wrote in a letter to investors.

Krishna added that the company had not anticipated the full extent of the shift. Large deals also failed to close on expected timelines, which he said accounted for most of the shortfall.