IBM to split into two as it reinvents itself

IBM to split into two as it reinvents itself
IBM currently has more than 352,000 workers. Source: GETTY IMAGES
2 Min Read

Daily US Times: One of the leading tech companies in the world International Business Machines (IBM), has announced it will split into two public companies.

The move is an attempt to shift its focus to higher-margin businesses like artificial intelligence and cloud computing.

A new company focusing on legacy IT infrastructure will be named and spun off 2021.

After the announcement, IBM shares closed nearly 6% higher.

The move marks the latest shift by the world’s first big computing firm to diversify away from its traditional businesses.

Chief Executive Arvind Krishna said: “We divested networking back in the 1990s, we divested PCs back in the 2000s, we divested semiconductors about five years ago because all of them didn’t necessarily play into the integrated value proposition.”

Mr Krishna was the key architect behind the company’s 34 billion dollar acquisition of cloud company Red Hat last year.

Currently, Microsoft and Amazon Web Services dominate the market for cloud services.

Mr Krishna wrote in a blog post: “To drive growth, our strategy must be rooted in the reality of the world we live in and the future our clients strive to build.”

Today, hybrid cloud and AI are swiftly becoming the locus of commerce, transactions, and over time, of computing itself,” he wrote in his post.

IBM currently has more than 352,000 workers. The company said it expects the separation to cost $5bn.

The tech company’s legacy businesses will be spun off into a new company called NewCo. This will encompass its “Managed Infrastructure Services” division.

Analysts said the move is an attempt to focus on more profitable business models in future.

You may read: Backlash over ‘insult’ to Indian dish Kamala Harris likes