IBM recently announced that it will split itself into two generic companies, ending a years-long drive from the world’s first large computing company to diversify away from its legacy business and now focus on high-margin cloud computing, as IBM will list its IT infrastructure services unit. Temporarily called NewCo, which provides technical support to 4,600 customers in 115 countries, and has an accumulated balance of $ 60 billion, as a separate company with a new name by the end of 2021.
Chief Financial Officer James Kavanaugh said: “The new company will have 90,000 employees, and its leadership structure will be decided within a few months.” IBM said, “It expects to record nearly $ 5 billion in expenditures related to business separation and operational changes.” Investors welcomed the surprise move announced by Chief Executive Arvind Krishna.
“We abandoned networks in the 1990s, abandoned personal computers in the 2000s, and abandoned semiconductors about five years ago because they all did not necessarily help support the integrated value proposition,” Krishna said in a call with analysts.
IBM’s annual revenue reached $ 77.1 billion last year, and Krishna said in April in his first quarterly call as CEO that the company would continue to shed programs and services that are inconsistent with IBM’s two most important growth areas: cloud computing and artificial intelligence.
After the company was a household name for its personal computers, IBM abandoned its personal computer business in 2005 and since then has focused on providing software services to large companies, governments and other organizations, it has worked to strengthen its cloud computing business but has struggled To compete with its biggest cloud competitors Amazon, Microsoft and Google.
Important numbers related to the IBM division:
IBM will generate about $ 59 billion in revenue after the split.
The new company will generate sales of $ 19 billion.
The split is expected to be complete by the end of next year 2021.
IBM currently has 352,000 employees.
The new company will have 90,000 employees and its leadership structure will be defined within a few months
The new company will have about 4,600 clients from large institutions.
The new company’s customers will spread to 115 countries
The new company owns $ 60 billion in backlogs
IBM revenue shrank in 29 of the past 33 quarters
The company expects $ 5 billion in expenses related to the separation and operational changes.
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