Focused on the cloud, IBM splits its activities into two listed companies
The IT group will separate from its IT services business. 90,000 employees will constitute this new autonomous giant in the installation and updating of servers in companies.
At 109 years old, it is not too late to draw a line on your past and reinvent yourself. This is the conviction of recently appointed IBM boss Arvind Krishna, who is preparing to split the age-old IT company into two listed companies. On the one hand, cloud technologies on which “Big Blue” relies to regain growth. On the other, IT services, glorious in the 1990s but more in difficulty lately.
The new company, which has not yet found its name, will house this second block of activity. Out of 350,000 IBM employees, 90,000 of them will join the spin-off which should officially take shape before the end of 2021. With $ 19 billion in annual revenue, the new company will be, according to management ” more than twice as much. bigger than its direct competitors ”.
From the start of the session on the Nasdaq, investors applauded the news. IBM’s share price took 5% in the morning in New York.
Focus on the cloud
For IBM, the challenge of this split is to be able to focus on the online IT market. Of course, the Armonk group still suffers from having arrived late in a market largely dominated by Amazon and Microsoft. But, driven by the performance of Red Hat – the open source champion that “Big Blue” bought in 2018 for $ 34 billion – IBM has picked up the pace.
In this segment, its turnover jumped 30% in the last quarter while the crisis following the Covid-19 epidemic pushed its historical customers to accelerate their IT migration to shared servers in cloud mode. ” From my first day as CEO, I was committed to the growth of IBM, ” writes Arvind Krishna in the message he sent to his employees explaining the operation.
By this yardstick, the Global Technology Services activity, which mainly covers activities set aside, was a stone in the boss’s shoe. For several years, incomes had been in free fall. As a flip side, companies interested in outsourcing part of their IT system to the cloud have less need for IBM’s expertise to install and update servers in their own data centers.