By Harshita Mary Varghese
Feb 9 (Reuters) – Kyndryl’s shares plunged 53% on Monday after the software provider delayed the filing of its October-December report, made several management changes, and launched an accounting review over potential weaknesses found in its internal controls.
The stock is on track to shed around $3 billion from its market value of $5.37 billion, if losses hold.
The company said the weaknesses span multiple periods, including its fiscal year ended March 2025 and the first two quarters of fiscal 2026.
Kyndryl said its audit committee began reviewing cash management practices, related disclosures and internal controls following voluntary document requests from the U.S. Securities and Exchange Commission’s enforcement division.
The company said investors should no longer rely on its assessment of internal controls over financial reporting or on its auditor PricewaterhouseCoopers’ opinion on those mechanisms in the company’s fiscal 2025 annual report.
PricewaterhouseCoopers did not immediately respond to Reuters’ request for comment.
Kyndryl was IBM’s infrastructure services business until its spinoff in November 2021. Since then, the company, whose software and services help businesses run day-to-day operations, has been restructuring several no-margin contracts inherited from IBM.
Separately, the company announced the departure of its finance chief David Wyshner and the stepping down of Vineet Khurana as global controller. A corporate controller is typically the chief accountant of a company.
Kyndryl appointed Harsh Chugh as its interim CFO and Bhavna Doegar as interim corporate controller, effective immediately.
The company declined to comment on whether the management changes were linked to its review of financial reporting.
However, the company currently does not expect an impact to its balance sheets, income statements, statements of cash flows or equity statements, it added.
New York-based Kyndryl on Monday also cut its fiscal 2026 outlook for constant-currency revenue to a decline of 2% to 3% from a prior forecast of 1% growth. For the quarter ended December, the company posted a 3% rise in revenue to $3.86 billion, thanks to sales tied to cloud hyperscaler deals.
J.P. Morgan downgraded Kyndryl to underweight, citing a negative guidance revision and a “stunning” CFO change that it said would delay the turnaround and raise fresh questions about the investment thesis.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Shilpi Majumdar and Leroy Leo)
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