IBM to split into two as it reinvents itself


International Business Machines (IBM) has announced it will split into two public companies.

The move is an attempt to shift its focus to higher-margin businesses like cloud computing and artificial intelligence.

A new company focusing on IT infrastructure will be named and spun off next year.

The company’s shares closed nearly 6% higher after the announcement, marking 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,” said chief executive Arvind Krishna.

Krishna was the key architect behind IBM’S $34bn acquisition of cloud company Red Hat last year.

Currently, Amazon Web Services and Microsoft dominate the market for cloud services.

“To drive growth, our strategy must be rooted in the reality of the world we live in and the future our clients strive to build. Today, hybrid cloud and AI are swiftly becoming the locus of commerce, transactions, and over time, of computing itself,” wrote Krishna in a blog.

IBM, which currently has more than 352,000 workers, said it expects the separation to cost $5bn.

IBM’s legacy businesses will be spun off into a new company called NewCo. This will encompass its “Managed Infrastructure Services” division.

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