Kyndryl spun off from IBM folded in half in a day: shares collapsed on accounting review
The company identified "weaknesses" during an accounting audit that resulted in the loss of their positions as Kyndryl's CFO and legal counsel
Kyndryl, spun off from IBM, collapsed 57% after an accounting audit and CFO departure / Photo: ShU studio / Shutterstock
Shares of IT infrastructure provider Kyndryl Holdings fell 57% to $10.11 a share in momentum trading on Feb. 9, after the company announced the departure of its chief financial officer (CFO) amid an internal accounting review launched after a request from the Securities and Exchange Commission's (SEC) enforcement division. The company also reported worse-than-expected earnings for the third quarter of fiscal 2026, Barron's writes.
The company said its audit committee is reviewing its cash management practices and "related disclosures," including factors affecting its adjusted free cash flow metric and the effectiveness of its internal control over financial reporting. Kyndryl Holdings acknowledged that it will likely report "material weaknesses in internal control over financial reporting for fiscal year 2025 and the first three quarters of fiscal year 2026," Barron's writes.
In response to the situation, David Wishner has resigned as Kyndryl's CFO and Edward Sebold has resigned as Kyndryl's General Counsel, both effective immediately. Harsh Chugh, formerly responsible for corporate development and operations, was appointed as Kyndryl's interim CFO, and Mark Ringes, formerly of the company's legal department, was appointed General Counsel.
For its most recent quarter, Kyndryl Holdings reported adjusted earnings of $0.52 per share on revenue of $3.86 billion - below the expectations of analysts who had forecast $0.6 per share and $3.89 billion, respectively, notes the Wall Street Journal.
The company also said it now expects full-year revenue to decline 2-3% in constant currencies, down from the 1% growth it had previously forecast. In addition, Kyndryl lowered its full-year guidance for adjusted profit before tax and free cash flow.
Kyndryl Holdings was spun off from International Business Machines (IBM) in 2021 and became a standalone company after certain lower margin service businesses were spun off from IBM's structure, Barron's notes. Both Wischner and Sebold have held their positions at Kyndryl since the company was formed, the WSJ points out.
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