Tuesday, September 30, 2025
spot_img

IBM to break-up into Two Companies

spot_img
- Advertisement -

IBM to break-up into Two Companies to focus on cloud growth

International Business Machines Corp (IBM Corporation) 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 technical support for 4,600 clients in 115 countries and has a backlog of $60 billion, as a separate company with a new name by the end of 2021.

The new company will have 90,000 employees and its leadership structure will be decided in a few months, Chief Financial Officer James Kavanaugh told Reuters.

IBM, which currently has more than 352,000 workers, said it expects to record nearly $5 billion in expenses related to the separation and operational changes.

Investors cheered the surprise move by Chief Executive Officer Arvind Krishna, the key architect behind IBM’s $34 billion acquisition of cloud company Red Hat last year, sending the company’s shares up 7%.

“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.

In a blog, Krishna called the move a “significant shift” in the 109-year-old company’s business model.

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

IBM, which has sought to make up for slowing software sales and seasonal demand for its mainframe servers, said it would now focus on open hybrid cloud and AI solutions that will account for more than half of its recurring revenues.

Krishna, who replaced Ginni Rometty as CEO in April, said IBM’s software and solutions portfolio would account for the majority of company revenue after the separation.

The company also said it expects third-quarter revenue of $17.6 billion and an adjusted profit per share of $2.58, roughly in line with Street estimates.

spot_img

Editorial

Why TCS Deferred FY25 Salary Hike: Better Hike Ahead?

TCS had initially announced its annual salary hike during...

Deloitte, PWC, EY, KPMG to Hire 1 Lakh People in India in FY25

According to estimates from top company officials and industry...

Higher EPS Pension Application Stuck: A Step-by-Step Guide to Fix

Nearly 97,640 Provident Fund (PF) members and pensioners under...

Employee Benefits at India’s Big 4 Firms Deloitte, PwC , EY, KPMG

The Big 4 firms; Deloitte, PwC (PricewaterhouseCoopers), EY (Ernst...

TCS Announces 4-8% Salary Hike for FY25, Lowest in Last 4 Years

Tata Consultancy Services (TCS), India's largest IT services provider,...

Must Read

Foxconn Directs Indian Recruiters to Drop Discriminatory Criteria

Apple supplier Foxconn has directed its Indian recruitment agencies...

India Proposes 36% Stipend Hike for Apprenticeship Training

Central Apprenticeship Council (CAC), under the Ministry of Skill...

EPFO monthly contribution to be cut to increase take-home salary

Millions of organized sector employees may soon have the...

E Shram 2025: Massive Perks for Gig Workers—Apply Today!

Government of India has launched the E Shram Gig...

Credit Suisse changes bonus structure for senior staff

Credit Suisse is boosting cash payouts for senior bankers,...

Amazon Canada to pay education costs to front line employees

According to the press release, Amazon Canada has announced...

High Court orders reinstatement of home guard sacked for being gay

High Court orders reinstatement of home guard sacked for...

Internship Opportunity: Stipend up to ₹18,000 for Tech Enthusiasts

AICTE and Nihal Software have announced openings for interns...

Related Articles

SightsIn Plus
SightsIn Plushttps://sightsinplus.com/
SightsIn Plus is an India’s leading high-quality people-focused monthly HR Magazine and provides up-to-date HR News, Leadership Announcements, Best HR Practices and Insights by Global CHROs, CEOs, HR Advisors, Business Managers and HR Heads on topics of interest to HR professionals. To subscribe SightsIn Plus, HR Magazine please visit- https://sightsinplus.com/subscribe/