The move will create two separate, publicly traded firms by the end of 2021, according to the USA computing giant. IBM says it is breaking off a $19 billion chunk of its business to focus on cloud computing.
IBM on Thursday unveiled a corporate reorganization to allow it to focus on cloud computing, spinning off its division for managed infrastructure.
IBM, which now has more than 352,000 workers, said it expects to record almost US$5 billion in expenses related to the separation and operational changes.
IBM has trimmed its legacy businesses over the years to focus on cloud, aiming to make up for slowing software sales and seasonal demand for its mainframe servers. Krishna said in April at his first quarterly earnings call as CEO that the company will continue to eliminate software and services that don’t align with IBM’s top two focus areas for growth: cloud computing and artificial intelligence.
IBM’s services business has been struggling, as many of its clients delayed purchases of information technology or software upgrades to focus on short-term stability and cash preservation to survive the pandemic.
Investors cheered the surprise move by chief executive officer Arvind Krishna, the key architect behind IBM’s US$34 billion acquisition of cloud company Red Hat past year, sending the company’s shares up 7 percent.
IBM also said it expected third quarter revenue of $17.6-billion and an adjusted profit per share of $2.58, in line with Wall Street estimates.