IBM announced today, a week ahead of when results would otherwise have been revealed, that its sales and earnings for the quarter had fallen by about 3% below its guidance/expectations.

The stock has declined by about 25% on this news, as I’m writing this about an hour before the close.

The reason for the shortfall, as I understand it, is that–as I would presume to have been common knowledge–the company’s customers have been dealing with skyrocketing costs of physical components like DRAM. So after buying hardware, they have less cash left over for software. It may also be that they have decided that component prices are only going higher, and as a result have pulled hardware purchases forward, leaving even less money available to pay for IBM’s wares.

Two thoughts–to be clear, I’ve never been a big fan of IBM and can’t recall ever having owned it, other than in index funds:

–a loss of a quarter of a company’s market value because of a 3% shortfall seems like a little much, and

–I wonder why the market needed IBM’s help to connect the dots that more spend on hardware means less for software. Of course, the answer may be in whatever caused the stock’s huge leap ahead during the second half of May.

What I find very interesting is that the market seems to have been so clueless. Where were the securities analysts? That this has happened with an industry titan underscores to me that much of Wall Street has left fundamental securities analysis behind and is heavily depending on rapid reaction, presumably by trading bots, to news releases.

If so, what an opportunity for you and me.