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IBM will spin off its business and focus on cloud services

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Miguel A. Rodriguez
Miguel A. Rodriguez
09 October 2020
IBM is reinventing itself as it will split in two

Cloud computing services became an essential part of companies and people's lives, given the current global situation. But as the demand for such service increases, #tech-specialized companies are looking to expand in it.

International Business Machines (IBM) announced splitting in two public companies - its IT services unit will be the new public entity. The separation is a significant move in IBM’s more-than-a-century-long existence.

IBM believes that the new company will have "an enhanced financial profile with a clear trajectory for improved revenue and profit growth." It follows IBM's purchase of RedHat for $34 billion in 2019 to boost its cloud offering. The split will be done by the end of 2021, just in time to announce the new company's name. So far, the second company is generically known as NewCo. 

According to Arvind Krishna, IBM CEO, "NewCo will have greater agility to design, run and modernize the infrastructure of the world's most important organizations. Both companies will be on an improved growth trajectory with greater ability to partner and capture new opportunities -- creating value for clients and shareholders."

IBM released its preliminary Q3 earnings figures. It forecasts its revenue to be $17.6 billion, with an adjusted EPS of $2.58. If the numbers are coming as expected by the company, the revenue will be higher that what the market expects, while the earnings per share figures will be met.

Following the news, IBM's stock price was shy of a 6% increase. 

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Sources: bbc.com, markets.businessinsider.com

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.