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

1. IBM lost 15 federal contracts due to DOGE cuts, totaling $100 million. 2. Federal contracts contribute 5-10% of IBM's consulting business revenue. 3. CEO Krishna downplayed DOGE's impact on future business profitability. 4. Consulting revenue decreased by 2% in Q1, totaling over $5 billion. 5. IBM emphasizes focus on critical government works amid the cuts.

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FAQ

Why Bearish?

The cancellation of federal contracts could indicate potential revenue instability. Historically, contract losses have led to decreased investor confidence and stock price declines.

How important is it?

Contracts make up a significant share of IBM's consulting revenue; thus, losing them can affect short-term earnings guidance.

Why Short Term?

The immediate effect of lost contracts will be felt in the next fiscal quarters. However, IBM's overall revenue structure may cushion longer-term impacts.

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