When Markets Punish Results but Reward Candor
A historic 25% drop in IBM’s stock highlights how leaders communicate when results disappoint. Drawing on my experience managing a similar one‑day fall at Merck, this post examines why Arvind Krishna’s candid investor letter stands out and how accountability and clarity shape long‑term trust, a core theme in Win Via Trust.
Michael Rabinowitz
7/15/20261 min read
IBM's stock just fell 25 percent on July 14th, the biggest one-day drop in its history.
I know what that day feels like from the inside. I headed Investor Relations at Merck when we withdrew a multi-billion dollar product from the market. Our stock fell 27 percent in a single day. Then came the analysts, the investors, and every hard question you can imagine, for months.
So I read IBM CEO Arvind Krishna's letter to investors this week with particular interest. He had a ready-made external story. Clients really did shift spending toward hardware ahead of price increases, and the shift was bigger than anyone forecast. He could have stopped there. Instead, he wrote in plain language: conditions required us to execute perfectly, and we faltered. We did not adapt fast enough. Large deals slipped. That drove the shortfall.
Then the line that matters most: "These are not excuses, but they are realities."
That is the distinction most leaders miss. An excuse asks to be let off the hook. A reality is named so it can be fixed. Krishna named the environment, owned the execution, and committed to corrective action with a date attached.
Those months heading IR reinforced a practical lesson which is fully captured in my book, Win Via Trust: investors can absorb terrible news. What they cannot absorb is spin. Credibility is earned as much in the worst quarters as in the best ones. Every straight answer moves the journey forward. Every dodge is a detour you pay for later.
The market punished IBM's results. My bet is it rewards the candor over time.
Does public humility after a miss strengthen a CEO's standing, or leave a scar? I'd argue it depends on the next two quarters. Accountability plus results builds trust. Accountability alone is just an apology.