IBM to break up 109-year old company to focus on cloud growth

IBM to break up 109-year old company to focus on cloud growth

FILE PHOTO: Man stands near an IBM logo at the Mobile World Congress in Barcelona
File photo of the IBM logo at the Mobile World Congress in Barcelona, Spain, Feb 25, 2019. (File photo: REUTERS/Sergio Perez)

NEW YORK: International Business Machines Corp (IBM) is splitting itself into two public companies, capping a years-long effort by the world's first big computing firm to diversify away from its legacy businesses to focus on high-margin cloud computing.

IBM will list its IT infrastructure services unit, which provides outsourcing services including technical support for data centres, as a separate company with a new name by the end of 2021.

Investors cheered the move by CEO Arvind Krishna, who also engineered the US$34 billion Red Hat deal for the 109-year old company last year, sending shares up nearly 11 per cent in pre-market trading.

IBM has shifted focus to cloud growth in recent years, aiming to make up for slowing software sales and seasonal demand for its mainframe servers.

Krishna, who took over as CEO from Ginni Rometty in April, said IBM's software and solutions portfolio will account for the majority of company revenue after the separation.

"The success we've had with Red Hat gives us confidence that this is the right move," Krishna said, calling the move a "significant shift" in the company's business model.

IBM also said it expected third-quarter revenue of US$17.6 billion and an adjusted profit per share of US$2.58, in line with Street estimates.

Source: Reuters/dv

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