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IBM to divide into two companies in strategy overhaul

2020-10-09 15:35 by


IBM is splitting into two public companies, with a spin-off handling the firm's legacy IT infrastructure work, allowing IBM to focus on new high-margin businesses, particularly cloud services and AI.

The new company — which has the placeholder name "NewCo" in official documents — will have roughly 90,000 employees and $19 billion in revenue. (IBM as it current stands has roughly 352,000 workers.) When the spin-off is completed, which IBM says will take place before the end of 2021, NewCo will automatically become the world's "leading managed infrastructure services provider," with a client list of some 4,600 customers that covers more than 75 percent of the Fortune 100.

NewCo will focus on managing and modernizing client-owned infrastructures and according to IBM, this represents a $500bn market opportunity. NewCo will leverage its expertise to provide hosting and network services, services management, infrastructure modernization and migrating and managing multi-cloud environments.

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

"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," Chief Executive Arvind Krishna said.

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