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IBM affected by DOGE cuts, downplays impact during Q1 earnings call

1. IBM lost 15 federal contracts due to DOGE cuts, impacting $100 million. 2. Federal contracts account for 5% to 10% of IBM's consulting practice. 3. IBM's consulting revenue decreased by 2% in Q1, amounting to over $5 billion. 4. CEO downplayed the impact of cancellations on IBM's future business. 5. IBM's consulting focus includes critical work like veterans benefit claims processing.

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FAQ

Why Bearish?

The cancellation of federal contracts may reduce revenue, negatively impacting stock price. Historical precedents show that federal contract changes usually lead to shareholder concern.

How important is it?

The article discusses significant federal contract losses that directly affect IBM's consulting revenue, highlighting a critical area of business.

Why Short Term?

Initial impacts from contract cancellations will be felt immediately, affecting quarterly results. The longer-term effects depend on the recovery of federal contracts and consulting revenues.

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