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

CIOReviewIndia Team | Friday, 09 October 2020, 13:09 IST

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

Capping a years-long effort, International Business Machines Corp is splitting itself into two public companies to focus on high-margin cloud computing. 

While, to have a backlog of USD 60 billion as a separate company with a new name by the end of 2021, IBM will lose its IT infrastructure services unit, which provides technical support for 4,600 clients in 115 countries. 

"We divested networking back in the '90s, 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," Krishna said on a call with analysts.

"IBM is essentially getting rid of a shrinking, low-margin operation given the cannibalising impact of automation and cloud, masking stronger growth for the rest of the operation," Wedbush Securities analyst Moshe Katri said.

IBM has also sought to make up for slowing software sales and seasonal demand for its mainframe servers. It also intends to focus on open hybrid cloud and AI solutions that will account for more than half of its recurring revenues. 

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