Kyndryl Sinks as CFO Departs, Accounting Review Disclosed
(Bloomberg) — Shares of Kyndryl Holdings Inc., an International Business Machines Corp. spinoff, plunged Monday after the company announced key leadership exits and a review of its accounting practices.
The stock fell a record 55% to close at its lowest level since December 2022 on news that Kyndryl Chief Financial Officer David Wyshner had left the position and that General Counsel Edward Sebold departed the post, effective immediately. On the same date, Vineet Khurana stepped down as senior vice president and global controller of the company and moved to a different role.
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The enterprise technology company also said it received a voluntary documents review from the US Securities and Exchange Commission’s division of enforcement. Kyndryl is reviewing its cash management practices, related disclosures including those regarding adjusted free cash flow, the efficacy of its internal control over financial reporting and certain other matters, according to a filing.
Also weighing on shares was the company’s earnings report. Kyndryl’s third quarter results missed expectations, and the company lowered its full-year forecast for both adjusted Ebitda and adjusted pretax profit.
Kyndryl said it does not anticipate the accounting review to impact financial statements, but will delay the filing of its quarterly report for the period ending Dec. 31. The company expects to report material weaknesses in the quarter, the full fiscal year ending March 31 and in the first two quarters of fiscal 2026.
“We are proactively addressing this matter and are developing a remediation plan that will be described in our 10-Q once it’s filed,” the company said in a statement.
Still, the announcements signal “mounting strain on a turnaround already under pressure,” Bloomberg Intelligence analyst Tamlin Bason wrote in a Monday note. “The company says financial statements won’t change, yet governance, controls and credibility are in sharp focus, raising execution and confidence risks, especially as Kyndryl simultaneously trimmed full-year targets.”
The news also prompted JPMorgan analysts to downgrade Kyndryl shares to underweight from overweight and lower their price target to $16 from $40.
“Today’s negative guidance revision and stunning CFO change delays the turnaround, creating new questions across the thesis and forcing bulls to return to the drawing board. As a result, our thesis no longer holds, prompting us to downgrade the stock,” the analysts wrote in a note, adding that the delayed 10-Q filing is a surprise.
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