IBM WILL SPLIT INTO TWO COMPANIES, TO FOCUS ON THE CLOUD FROM THE NEW

IBM is a major global technology company that has known how to adapt to the different stages that it has had to live, which has allowed it to stay afloat throughout its life, and now, for the first time in its more than 109 years of history, shall be divided into two independent undertakings.

The news has been a surprise move that has been well seen by investors, to the point that their stock on the stock market has risen up to 10% before the market opens, according to Reuters.

Behind this movement is Arvind Krishna, who also managed to raise the company’s shares up to 7% with the acquisition of Red Hat last year for about 34 billion dollars, which has allowed him to earn the position of CEO of the company this year.

With the new scenario looming for IBM, on the one hand will be the classic IBM, focused on the sale of software and the seasonal demand for its mainframes, which is suffering a slight setback, and on the other, a new company, of which the name is not yet known, which will be focused on the cloud and artificial intelligence, segments that are currently in full swing and generating significant revenue.

The new company will start operating at the end of next year, with 90,000 employees, whose management structure will be decided in a few months. In addition, it will have IBM’s IT infrastructure services unit, which offers technical support to 4,600 customers in 115 countries, with everything related to Red Hat, in addition to having a portfolio of orders of 60 billion dollars.

In this separation process, IBM expects to spend nearly $5 billion on everything related to separation and operational changes. For Krishna, the measure implies a significant change in the company’s business model.

For Moshe Katri, analyst at Wedbush Securities:

IBM is essentially getting rid of a contract operation and low margin given the cannibalising impact of automation and cloud, masking stronger growth for the rest of the operation