IBM Stock Is Falling. Investors Are Digesting an Executive Exit and Email Server Snafu.

4 weeks ago 7

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IBM announced Friday the departure of enforcement Jim Whitehurst, pictured here.

David Paul Morris/Bloomberg

International Business Machines banal continues to sag pursuing the company’s Friday announcement of a absorption shuffle that includes the astonishment departure of IBM President and Red Hat CEO Jim Whitehurst. While IBM said that Whitehurst volition stay a “senior advisor” to CEO Arvind Krishna and the remainder of the enforcement team, the deficiency of immoderate wide mentation for the unexpected exit evidently is making IBM investors disquieted that thing is wrong.

IBM (ticker: IBM) banal connected Tuesday is down 1.5% to $137.93, boosting the stock’s two-day diminution to 6%.

Stifel expert David Grossman wrote successful a probe enactment Tuesday that galore observers had thought Whitehurst yet would win Krishna arsenic CEO of the company. “It remains unclear wherefore Whitehurst is leaving,” Grossman wrote, adding that leaving the question unanswered could make an overhand connected the stock. 

But Grossman repeated his Buy standing connected IBM shares, keeping his $151 people price, noting that the banal present sports a 4.7% dividend yield.


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Morgan Stanley expert Katy Huberty writes successful a probe enactment that Whitehurst’s departure is “more of a earthy progression than a reddish flag,” adding that “while investors are acrophobic that this has antagonistic read-throughs for the wellness of IBM’s hybrid unreality concern and/or aboriginal outlook, we spot this arsenic a earthy progression for Jim, arsenic astir of the Red Hat integration is complete.”

Meanwhile, she notes that determination is the imaginable that a wide caller email outage astatine IBM could impact the timing of immoderate deals and interaction second-quarter fiscal results. She notes that IBM has shifted to caller internally hosted email servers, and that “the migration didn’t spell arsenic planned,” leaving immoderate employees with intermittent email entree and nary entree to their calendars for 4 to 5 days. 

“This could pb to immoderate gross designation being pushed out, arsenic IBM reportedly requires declaration e-signatures earlier midnight connected the past time of the 4th to publication a woody arsenic gross successful the quarter,” she writes. “In summation to immoderate interaction successful the June quarter, the outage raises immoderate reputational hazard for IBM Services which manages thousands of lawsuit migrations akin to this 1 each year.”

Huberty keeps her Equal Weight standing and $152 terms people connected IBM shares.

IBM could not instantly beryllium reached for comment.

Write to Eric J. Savitz astatine eric.savitz@barrons.com

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