"The company seems to be having some execution problems, and we think that their growth markets, emerging markets, are going to continue to be weak for the next few quarters," he said. "So, we see it as dead money for, say, the next six months."
Milunovich downgraded IBM stock to neutral and lowered its price target to $186 per share from $235.
(Read more: IBM shares skid after revenue miss)
On CNBC's "Fast Money," the analyst said his upgrade of the stock in April was "for long-term reasons," adding that he "didn't think the short-term would be this bad."