Iran, other uncertainty is weighing on company’s outlook
IBM CEO Arvind Krishna speaks at the SXSW conference on March 11, 2025 in Austin, Texas.
Andy Wenstrand | Sxsw Conferences and Festivals | Getty Images
International Business Machines The Iran war and other geopolitical uncertainty have led the company to remain cautious, CEO Arvind Krishna told CNBC on Wednesday.
IBM beat analysts’ first-quarter earnings estimates at the top and bottom lines but maintained its guidance amid macro uncertainty.
“Will there be a problem with oil as inflation increases? Will that push people to spend a little less? If they spend a little less, that’s not a direct impact on me, but a lot of consumer companies are my customers, for example Walmart. “If people buy less at Walmart, they will find a way to control their costs, so they will buy less,” he said.
Krishna noted that IBM’s Middle East business is doing well despite the Iran conflict.
The company reported revenue of $15.92 billion in the first quarter, beating LSEG’s consensus estimate of $15.62 billion. Adjusted earnings per share came in at $1.91, 10 cents better than expectations. Software was left behind as Red Hat’s growth rose to 10%.
Krishna said he was also cautious about growth concerns in Europe.
“That’s the one place where I think there’s a little bit of squinting because there’s also a little bit of exhaustion, right? You’ve had the Covid shocks, you’ve had the Ukraine war. So they’ve been through these shocks a few times and they’ve actually come out OK. I think it’s an open question this time,” Krishna said.
“I don’t think anyone will know the answer to that question for another month or two,” he added.
Mythos
“Someone does something. It looks magical. It looks amazing. We think it’s the one thing. Three months later someone copies it and actually does it better,” he said.
“I would be surprised if someone else hadn’t done this before and bothered to claim it,” he added.
IBM shares tumbled in April after the AI startup said its Claude Code tool could modernize legacy systems running the Common Business Oriented Language. COBOL is a code system developed in the late 1950s and regularly used in commercial data processing.
The launch of Mythos triggered a surprise meeting between Treasury Secretary Scott Bessent and Fed Chairman Jerome Powell with the heads of major US banks over AI cyber concerns. Bessent and Vice President J.D. Vance had a conversation with tech CEOs like Anthropic’s Dario Amodei, OpenAI’s Sam Altman, xAI’s Elon Musk and others on the same topic.
“This is a huge conversation, and there is no doubt that it can find and exploit vulnerabilities at a rate and speed never seen before,” Krishna said.
