IBM is destroying a 109-year-old company to focus on cloud computing
IBM is destroying a 109-year-old company to focus on cloud computing

IBM announced Thursday that it will split into two publicly traded companies. This is the first large IT company in the world to abandon its original business diversification for many years. Focus on high-performance cloud computing now.

IBM will list its IT Infrastructure Services Division, which provides technical support to 4,600 customers in 115 countries / territories with a cumulative balance of $ 60 billion, and will be renamed as a new company by the end of 2021.

The Chief Financial Officer (James Kavanaugh) told Reuters: The new company will have 90,000 employees and its management structure will be completed within a few months.

The company said IBM currently employs more than 352,000 people and expects to spend close to $ 5 billion on terminations and operational changes.

Investors welcomed the unexpected move by CEO Arvind Krishna, who was preparing for IBM to acquire engineers from the cloud computing company (Red Hat) for $ 34 billion last year, and the company's share price rose. 7%. .

"We gave up the network in the 1990s, and we did the PC inventory and the semiconductor inventory there in the first decade of the 21st century. About five years ago. Because it might not all help support the total value proposition," Krishna said in a conference call with analysts. ''

Krishna (Krishna) said in a blog that this decision represented a "significant change" in the company's business model for 109 years. IBM has tried to offset the decline in software sales and seasonal demand for mainframe servers. IBM will now focus on open hybrid cloud computing and AI solutions that will account for more than half of its recurring revenue.

Krishna, who replaced Jenny Romty as CEO in April of this year, said IBM's software and solutions portfolio would account for the majority of the company's revenue after the split.

The company also said it expected sales of $ 17.6 billion and adjusted earnings per share of $ 2.58 for the third quarter, roughly in line with Wall Street's estimates.

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