IBM will spin off its business and focus on cloud services

IBM will spin off its business and focus on cloud services

IBM is reinventing itself as it will split in two

Cloud computing services became an essential part of companies and people's lives, given the current global situation. But as the demand for such service increases, #tech-specialized companies are looking to expand in it.

International Business Machines (IBM) announced splitting in two public companies - its IT services unit will be the new public entity. The separation is a significant move in IBM’s more-than-a-century-long existence.

IBM believes that the new company will have "an enhanced financial profile with a clear trajectory for improved revenue and profit growth." It follows IBM's purchase of RedHat for $34 billion in 2019 to boost its cloud offering. The split will be done by the end of 2021, just in time to announce the new company's name. So far, the second company is generically known as NewCo.

According to Arvind Krishna, IBM CEO, "NewCo will have greater agility to design, run and modernize the infrastructure of the world's most important organizations. Both companies will be on an improved growth trajectory with greater ability to partner and capture new opportunities -- creating value for clients and shareholders."

IBM released its preliminary Q3 earnings figures. It forecasts its revenue to be $17.6 billion, with an adjusted EPS of $2.58. If the numbers are coming as expected by the company, the revenue will be higher that what the market expects, while the earnings per share figures will be met.

Following the news, IBM's stock price was shy of a 6% increase.

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Sources: bbc.com, markets.businessinsider.com

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