NEW YORK - IBM (NYSE, July 20 -- IBM) chief executive Arvind Krishna broke from standard investor relations protocol on the morning of July 14, publishing a pre-earnings letter that acknowledged failure in language rarely seen in disclosures from a company of IBM's scale. "We did not adapt and move quickly enough," he wrote, "and numerous large deals failed to close." The market responded by erasing twenty-five percent of IBM's market value in a single session, the worst single-day collapse in the company's one hundred and fifteen year history.

The preliminary financial results Krishna disclosed were not catastrophic by conventional measures. Revenue of 17.2 billion dollars against a Wall Street consensus of 17.86 billion, a miss of roug...