International Business Machines Corp. plunged the most in more than four years after abandoning an earnings forecast for 2015, as the company struggles to transform fast enough to handle the shift to cloud computing.
IBM said it will provide an update on its projections in January, ditching a five-year plan to boost profit. The shares tumbled as much as 8.4 percent, dragging down the Dow Jones Industrial Average. Warren Buffett, IBM’s biggest shareholder, had as much as $1 billion of his investment wiped out.
While Chief Executive Officer Ginni Rometty had been banking on a strong second half of the year, IBM instead faced weaker-than-expected software sales and lower productivity in services in the third quarter. With technology customers moving from owning hardware to storing data in the cloud, IBM is now cutting more jobs, reducing its forecast for free cash flow and offloading an unprofitable chip unit to Globalfoundries Inc.
“Obviously we were disappointed in this quarter,” Rometty said on a conference call today, adding that the company is facing “unprecedented change” in the industry. “We have more to do and we need to do it faster.”